While drilling and contracting activity remains high, the IEA has called for less reliance on hydrocarbons after the oil and gas industry raked in a record US$4Tn in 2022 profits
At the ongoing Oslo Energy Forum in Norway, International Energy Agency (IEA) executive director Fatih Birol touched on reports that the oil and gas industry has generated an astronomical US$4Tn in profits over the last year, a significant increase from the already outsized annual average of US$1.5Tn.
Mr Birol called on countries to reduce their reliance on petroleum in the future noting that demand for the commodity will decline in the long term. Reuters quoted Mr Birol as saying, “You cannot run a country whose economy is 90% reliant on oil and gas revenues anymore because oil demand will go down.”
But for now, hydrocarbons continue to dominate. IEA’s own 2023 oil market report projects global oil demand to rise by 1.9M barrels per day (b/d) to 101.7M b/d this year. And as OSJ has reported, offshore drilling is booming in Brazil, Norway and Guyana. The latter is hosting an oil conference this week and hopes to finalise new production sharing agreements this year, with major player Exxon reportedly considering further exploration.
Meanwhile, a potential strike is looming in the UK offshore industry. On 14 February, the trade union Unite the Union announced that workers employed by Petrofac on the FPF1 platform, and the Wood Group UK Ltd on TAQA platforms are being balloted for strike action.
The ballot is part of a wider industrial dispute between employees working in the United Kingdom Continental Shelf. Over 1,300 Unite members are now involved a series of disputes across multiple companies including BP and Odfjell.
The Petrofac dispute involves about 50 workers on the FPF1 platform and it is centred on working rotas.
Unite is balloting around 80 members working for the Wood Group on TAQA platforms - Cormorant Alpha, North Cormorant and Tern Alpha and demands centre on the reinstatement of a 10% salary cut made in 2015 worth around £7,000 (US$8,468) a year, and an enhanced redundancy and retention scheme. The ballot includes electrical, production and mechanical technicians along with pipefitters, platers, riggers and deck crew.
Both ballots run for four weeks opening 17 February and closing 17 March. Unite said any industrial action could take place in early April following a successful ballot.
In Westwood Global Energy Group’s week 7 2023 figures, drilling activity remains high, though active jack-up units have tapered off from 396 units in week 1 to 389 units this week.
In contracts news, Borr Drilling’s jack-up rigs Ran, Gerd and Natt have been awarded a new contract and two extensions respectively. These awards increase the company’s firm backlog by approximately 625 days, excluding unexercised optional periods.
Ran has secured a contract with Fieldwood Energy for work in Mexico. The scope of the work includes two firm wells with an estimated duration of 50 days, and one optional well with an estimated duration of 75 days. The firm work has an estimated contract value of US$7.5M, excluding mobilisation and demobilisation. The contract commences in June 2023, in direct continuation of Ran’s ongoing contact, and is expected to keep the rig contracted until Q4 2023 when it will start its subsequent contract, as previously disclosed by the Company.
Gerd had certain priced and unpriced options exercised by Addax, extending the contract by 10 months, keeping the unit employed until the end of January 2024 and has an estimated contract value of US$40M. No further options are available under this contract.
Eni has exercised a three-well option for Natt, extending the rig’s contract by 270 days, keeping it contracted until Q1 2024. The contract is valued at US$22.7M.
Japan Drilling Co was awarded a contract by Indonesian firm Medco Energi for the jack-up Hakuryu 11. The Tokyo-based offshore driller will deploy the rig for work on Thailand’s offshore shallow water Bualuang field for a contract that will last roughly 60 days. Hakuryu 11 will drill four firm workover wells and three optional wells for work that commences at the end of February.
Shelf Drilling reported Rig 141 has secured a one-year contract extension with Gemsa Petroleum Co for operations in the Gulf of Suez, offshore Egypt. The extension will keep Rig 141 employed (in direct continuation of its current term) until February 2024.
Offshore drilling giant Transocean has issued its quarterly fleet status report netting new deals and extensions worth US$1.9Bn across waters offshore Brazil, the North Sea, the US Gulf of Mexico and Suriname. Transocean did not disclose the clients for any of these deals.
In Brazil, Deepwater Corcovado was awarded a four-year contract at US$400,000 per day, Deepwater Orion clinched a three-year contract at US$417,000 and Dhirubhai Deepwater KG2 secured a 910-day contract in Brazil at a current rate of $439,000 per day.
In the US Gulf of Mexico, Deepwater Invictus was awarded a three-well contract at US$425,000 per day. An option was exercised for drillship Deepwater Asgard in the US Gulf of Mexico at US$395,000 per day. Transocean’s fleet status report from September 2022 noted Texan firm Murphy Oil hired the drillship for a one-well contract in the Gulf of Mexico commencing November 2023. The contract included a one-well extension option.
Semi-submersible Transocean Barents signed a one-well contract in the UK North Sea at US$310,000 per day. Harbour Energy exercised an eight-well option for the Paul B. Loyd Jr. semi-submersible in the same region at US$175,000 per day.
Transocean Norge is on contract with Wintershall Dea and OMV. Certain previously disclosed options in Norway have been added to the rig’s backlog at current dayrates between US$414,000 and US$424,000 per day.
An unnamed customer believed to be TotalEnergies exercised a one-well option for Development Driller III. The vessel will work offshore Suriname at US$360,000 per day.
These deals push Transocean’s total backlog to approximately US$8.5Bn as of 9 February.
A Transocean subsidiary will also invest in Belgian deepsea mineral exploration firm Global Sea Mineral Resources NV (GSR) in exchange for a non-controlling interest in the company. GSR is the deepsea mineral exploratory division of DEME Group, engaged in the development and exploration of deepsea polymetallic nodules that contain critical metals for the renewable energy.
Transocean has agreed to contribute the stacked Ocean Rig Olympia for GSR’s ongoing exploration work, contribute to engineering services and make a nominal cash investment. GSR intends to convert the rig for a system integration test scheduled for 2025 to validate the technical and environmental feasibility of recovering polymetallic nodules in ultra-deepwater on a commercial scale.
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