Saudi Arabia is driving demand for offshore drilling rigs as it seeks to boost its production capacity over the next few years, according to a recent report.
Saudi Aramco contracted two newbuild jackups over the past month, adding to three newbuilds contracted in April for a total of five jackups for delivery before the end of the year. “We believe that all five newbuilds are incremental as Saudi Aramco has stated it plans to double its offshore fleet to 90 by 2024 as part of its drive to boost the kingdom’s production capacity by 1 MMb/d to 13 MMb/d by 2027,” the report by Evercore stated.
According to Offshore report, Saudi Aramco announced 16 jackup contracts this month for a total of 80 rig years, with the majority of the contracts for five years each plus two option years. Only one contract was an extension, with four contracts for active rigs to mobilize to the Kingdom upon completion of current contracts.
In addition, five idled rigs that recently completed their respective contracts in China, Brunei, Thailand, Qatar, and the UAE will move to Saudi Arabia for new long-term contracts, as well as four previously cold-stacked rigs that operated in Mexico (three) and Vietnam (one). ADES “was the clear winner this past month,” Evercore said, with 13 rig contracts while the balance was awarded to COSL.
Assuming Saudi Aramco renews all 12 jackups scheduled to roll off contract over the course of this year and all new contracts commence on time as planned, Saudi Arabia’s jackup count is expected to increase from 49 to 70 by year-end while another six units are scheduled to begin their new contracts in 2023, Offshore reports.
- Dayrates have reportedly improved to the high $90s range from the high $70s previously, with 19 tenders still outstanding for multiple drilling and workover rigs for three or five-year terms plus options.