Bankruptcies, canceled contracts, and abandonment of newbuilds have left several China-based shipyards with an oversupply of jackups. The Chinese government has not allowed shipyards to sell them at discounts large enough to tempt Western buyers. In 2019, the government devised a process to get these units into the market – without having to force state-owned driller COSL to take them all. Based on Rystad Energy’s forecast through 2021, there is no need for these newbuilds to meet upcoming demand. To reach global jackup utilization of 75%, 84 need to be removed from the active drilling fleet by 2021.
– Liz Tysall, Lead Analyst, Oilfield Service Team; and Jo Friedmann, Senior Analyst, Oilfield Service Team, Rystad Energy