Rigs report: Latin American market growth and future rig reactivations

Westwood’s analysis referred to a handful of high-profile acquisitions of what has been called an ’orphan fleet’ of stranded rigs at Asian shipyards.

Among the 15-17 cold-stacked rigs Westwood are tracking, the average laid-up drillship is 10.4 years old and has been stacked for 4.5 years, according to the group’s figures. 

"So it is no simple feat to just click your fingers and bring these drillships back into the market. There is a huge amount of cost and investment required to bring these drillships in to keep up with demand, but what this allows the drilling contractors to do, of course, is to retain the pricing power on their side. These guys are in no real rush to bring these rigs back and to make that investment while they are enjoying the day rates in that US$400,000-500,000 a day mark," Mr Payne said.

Noting that Westwood’s assessment metric for ’committed’ rig utilisation, or the number of rigs contracted, as well as those that are inactive but effectively off the market due to future near-term commitments, sets drillship utilisation at 95% already and committed utilisation in the other rig sectors at between 80-90%, Mr Payne said the group expects a "step change in rig utilisation in 2023".

"What this means is that you cannot secure new tonnage in the market today for the first time in many, many years," Mr Payne said.

Westwood Global Energy director for the RigLogix platform Teresa Wilkie expanded on Westwood’s figures, noting the ’golden triangle’ of Brazil, the US Gulf of Mexico and West Africa are the biggest drivers of demand for drilling, generally. 

For shallow-water vessels, jack-ups and floaters, there is limited ready drill supply left, as well, resulting in more reactivation and the potential for more newbuilds coming into yards.

The Middle East and Americas were the largest growth areas for rig demand last year, mainly driven by National Oil Companies’ (NOCs) plans to increase domestic supplies and production.

Discussing the rig demand outlook for 2023, Ms Wilkie said the majority of demand for 2023 will also come from NOCs, but some newer areas will have an increased rig presence following large discoveries over the past few years.

The top five regions with the highest demand all include countries that have an NOC presence (China, India, Brazil, Mexico and Saudi Arabia – not in that order), she said.

In contracts news, Stena Drilling’s Stena IceMAX vessel has won a contract extension from BP. The extension is in direct continuation of the initial one-well programme offshore Newfoundland, but will reposition the vessel to the US Gulf of Mexico for two years. In a LinkedIn post, Stena said drilling operations will commence later in 2023.

UK-based Stena also won a new semisub rig contract for the Stena Spey rig from Ithaca Energy for a one-well campaign on the UK Continental Shelf. The warm-stacked rig is expected to begin operations Q3 2023. 

Malaysia’s Velesto Energy’s offshore drilling unit has secured a new contract with Roc Oil of US$14M for the Naga 2 premium jack-up rig. The rig will be used to drill three wells. 

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