Rigs are leaving the North Sea for higher prospects elsewhere, leaving a threat to availability as oil and fuel initiatives are anticipated to ramp up in 2024.
Westwood World Vitality Group mentioned demand outlook for semisubmersible rigs in 2023 is “uninspiring” and will see extra models go away the area subsequent 12 months.
The identical could be mentioned for jackups too, as rigs depart for “new contracts with longer phrases and better dayrate potential”.
Shrinking rig provide of semisubs will assist buoy utilisation, which is “lagging”, however might “pose availability points additional down the road if demand picks up, which Westwood predicts could be the case from early 2024”.
The consultancy’s analyst, Teresa Wilkie, mentioned that North-west Europe is behind on utilisation, at round 78%, in comparison with 90% in different areas.
Fairly than keep idle, corporations are sending their vessels elsewhere.
Up to now this 12 months, Island Innovator and Deepsea Bollsta have left for brand spanking new campaigns in Africa, and Westwood mentioned rumours counsel a 3rd unit is deliberate to depart for Africa subsequent 12 months, whereas one other might decide up a marketing campaign in Australia, beginning within the second half of 2023.
Rigs are leaving regardless of current contracts displaying improved day charges; the agency mentioned “sources” counsel $300,000 for Transocean Barents within the UK, and $408,000 for Wintershall DEA and OMV in Norway for Transocean Norge.
There may be comparatively low demand visibility in 2023 for semisubs, which might bode poorly for the next 12 months when it’s anticipated to select up.
Excellent demand at current is nearly 64% lower than the seen demand outlook for 2024. In the meantime common contract period is simply 171 days – round 43% decrease than in 2022.
Ms Wilkie mentioned: “Throughout 2024, Westwood expects to see a number of new Norwegian developments transfer forward due to the tax incentives that had been applied by the federal government throughout 2020. In the meantime there are a number of long term UK campaigns prone to start-up, consisting of plugging and abandonment (P&A) work in addition to growth initiatives.”
Westwood mentioned there are 4 semisubs with “free and clear availability”, however two of these are anticipated to go elsewhere and two others are rumoured for brand spanking new UK offers.
4 others might develop into out there in 2023 if extensions aren’t secured, plus there’s a “handful of different models that would additionally transfer into the North Sea from China, Canada, and different areas ought to demand name for it”.
Market fundamentals present “potential” for a tighter market, however not till 2024 except there’s additional demand in 2023.
Till that point, Westwood mentioned contractors will proceed to evaluate alternatives “in different areas the place long term and extra fruitful alternatives are showing”.
This poses a couple of questions, Ms Wilkie mentioned. “As soon as out of the market, how lengthy will it take for these rigs to return to the North Sea? If demand does certainly proceed to develop from 2024 onwards, will there be sufficient provide to cowl it? And simply how a lot will operators be prepared to pay to safe drilling property for his or her campaigns in a significantly tighter market?”
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