Brent crude oil was up week-on-week by 4%, closing at US$47.69 per barrel on 30 November, rising US$1.89 from US$45.80 on 23 November
Brent has been strengthening for the month of November, supported by continuing production curbs by OPEC+. Since closing at US$37.86 on 30 October, Brent crude oil has risen US$9.83 – a 26% jump in one month.
Those price gains could be quickly lost in the new year if OPEC+ lifts production curbs as planned in January. “We believe keeping the current agreement in place – which calls for raising target production by 1.9M b/d from January 2021 – could send Brent back down to US$40 per barrel or lower,” said Rystad Energy head of oil markets Bjornar Tonhaugen. “A three-month extension would only provide marginal support to prices but would help to establish US$50 as a sturdier floor, while a six-month extension could help to meaningfully deplete the storage overhang and supercharge prices into the mid-US$50s,” he added.
The production cuts were put in place to bolster the price of oil and paydown the monthly surplus of oil that resulted from the countrywide lockdowns and the energy demand destruction caused by the coronavirus pandemic.
If OPEC+ does not extend the production curbs in January, smaller surpluses are bound to continue through May, building a total glut that will exceed 200M barrels for the first five months of 2021, before finally starting to shrink from June, said Rystad Energy.
Jack-up, floater activity stable
Global offshore jack-up rig activity climbed for the second week in a row, while floater activity remained stable during week 49 2020, according to Westwood Global Energy’s RigLogix. Overall, there were 323 jack-up rigs contracted for the week of 30 November, up one unit week-on-week, while 104 floaters remained actively drilling.
Among the floaters that will be busy in 2021 are Maersk Valiant and Maersk Developer, which will be conducting a drilling campaign offshore Suriname. Under a Conditional Letter of Award from Total E&P Suriname, Maersk Drilling will supply two deepwater rigs for an exploration and appraisal project in Suriname’s Block 58, starting in early 2021. With a firm combined duration of about 500 days, the estimated firm total contract value is approximately US$100M, including rig upgrades and integrated services provided.
A DSS-21 column-stabilised dynamically positioned semi-submersible rig, 2009-built Maersk Developer is currently operating in Suriname and has the capability of drilling in 3,048 m of water.
A high-specification seventh-generation drillship with integrated MPD capability, 2013-built Maersk Valiant is currently warm-stacked in Aruba after finishing a campaign in Mexico earlier this year.
Seadrill files for Chapter 11
Battered by the downturn in the oil and gas market and burdened with debt, Seadrill Partners LLC has joined a long list of offshore drilling contractors that have filed for reorganisation under Chapter 11 bankruptcy. The news comes as US-based Noble Holding reported the US Bankruptcy Court for the Southern District of Texas had approved the company’s joint plan of reorganisation, setting the stage for emergence from Chapter 11.
Pacific Drilling, Diamond Offshore Drilling and Valaris have all filed for Chapter 11 reorganisation.
In October, Seadrill signed a contract with BP for additional work for sixth-generation ultra-deepwater drillship West Vela in the US Gulf of Mexico. With a firm value of US$23.8M, the contract is expected to run until early April 2021.
Baker Hughes reported there were 12 offshore drilling rigs active in the US Gulf of Mexico on 25 November, unchanged week-on-week and down 10 units year-on-year.
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