In October, the offshore rig market wiped out all the meager gains made recently in terms of rigs under contract and working. Those segments have fallen to 424 units and 377 units, respectively, which is about where they were at a year ago. However, this is not all bad news, because at the same time, the total supply of jackups, semis, and drillships has dropped to 809. As a result, utilization only fell one point to 52.3%. It is likely that more rigs will roll off contract in the coming months as the market still hunts for the bottom, but as long as more units are removed from the fleet in the process, it will make for a stronger market in the long run.
– Justin Smith, IHS Markit Petrodata
South Asian subsea market is set for growth
Spending levels in the South Asian subsea market have not been lower in a decade, but Rystad Energy sees a recovery taking form. Several contracts have been awarded, including the OneSubsea subsea production system contract for the R-Cluster project offshore India. Key offshore developments are expected to be sanctioned in India and Vietnam in 2018 with $3 and $0.5 billion in aggregated subsea contract awards available, respectively. Malaysia and Indonesia will follow in 2019 and 2020.
The shift is a result of cost reduction efforts, like standardizing and simplifying subsea developments in the offshore industry. The analyst expects E&P operators’ subsea expenditures to grow with a CAGR of 50% y/y from $1 billion to $3 billion over the next three years.
– Lars Mikkel Reiersen,
Analyst, Rystad Energy
More OPEC production cuts needed
The medium-term future of the oil and gas industry rests with OPEC’s impending decision to potentially extend production restrictions beyond the end of March 2018. Westwood Global Energy predicts a nine-month extension would lead to a supply-demand equilibrium in 2018, avoiding a return to a significant supply glut. Without additional OPEC intervention, Westwood’s base case is an oversupplied market of 1.3 MMbbl, comparable with that of 2015.