Demand for drilling rigs rises again

10/09/18

Higher oil prices and more cost-effective offshore projects are boosting the demand for drilling rigs. According to an IHS Markit study, demand will continue to increase until 2020, especially for deep waters.

The average demand for drilling units, including jack-ups and floaters, is expected to increase 13% between 2018 and 2020. The highest demand will be for semi-submersibles and deep-sea drill ships. Global demand is expected to be 521 units by 2020.

According to the report, demand for jack-ups is expected to rise from 321 in 2018 to 352 in 2020, while demand for drill ships is expected to rise from 71 to 89 over the same two-year period. On a worldwide scale, the Middle East should account for approximately ⅓ of this increase.

“Operators will take advantage of current cost reductions to increase bidding, which has already happened this year,” said Justin Smith, a marine platforms analyst at IHS Markit and one of the authors of the study.

Despite the expected improvement over the next two years, the rig market is still oversupplied and few contracts signed.

About 132 jack-ups, semi-submersibles and drill ships are currently being built, but only two of them are under contract. As long as the delivery dates are postponed and some may even be canceled – in particular the platforms ordered by Sete Brasil – the presence of these units will continue to exert negative pressure on daily rates until the market reaches more balance, according to the study.

Source: Brazil Energy

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