Statoil & Partners Sign Long-Term LOIs for Three Rigs

Letters of intent covering long-term charters for three drilling rigs have been signed by Statoil on behalf of a partnership which also includes Hydro, Shell and Eni.

These four operators have established a new collective business model for extended joint chartering and use of mobile rigs.

This approach makes it possible to deploy these units more efficiently and to secure a good spread of risk.

The letters of intent have been awarded to Smedvig for West Alpha, and to Transocean for its Transocean Arctic and Polar Pioneer rigs.

Currently drilling on Statoil's Kristin development in the Norwegian Sea, West Alpha is due to be chartered for three years from the first quarter of next year. The contract is estimated to be worth around USD 273 million.

The two Transocean units would be hired for a year each. The charters, worth USD 200 million, are expected to come into effect from the third quarter of 2006.

Polar Pioneer is now drilling production wells on Statoil's Snøhvit development in the Barents Sea, while Transocean Arctic is working for the group in the Norne area of the Norwegian Sea.

In a tight market, where rigs are needed for both exploration and production drilling, the collaboration with Eni, Hydro and Shell is forward-looking.

This partnership also represents a milestone for operator cooperation on the Norwegian continental shelf, says Arne Tillerli, Statoil's project manager for the co-operation agreement.

"It provides good access to qualified rig capacity without the companies being forced to accept a disproportionately high level of financial risk for the charters."

Plans call for the rigs to be used initially for exploration activities in areas with challenges relating to high pressure and temperature (HPHT) and in the Barents Sea.

They could also be utilized for exploration wells in other parts of the NCS and for production drilling.

"No final decision has been taken on where the rigs will be used or which companies will utilize them at any specific time," explains Mr. Tillerli.

"The aim is that the overall rig capacity will be used in the most optimum possible way in relation to total license requirements."

Statoil has good experience of collaborating with other companies over mobile rigs, but this has so far been limited to single units.

The most recent examples include partnerships over Ocean Vanguard, Eirik Raude and Transocean Leader in 2004.

However, the new model marks a further development in that it embraces several rigs at a time. That also allows the long-term financial risk exposure to be shared.

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