Offshore Investments Back To Pre-Pandemic Levels, Westwood Claims

Energy research, analysis, and consulting specialist for exploration and oilfield services Westwood Global Energy Group revealed a year-on-year growth for the global offshore rig market at the close of 2021, up 200 percent from 2020.

Westwood said in its latest analysis that this major rise in offshore rig work was bolstered by significant engineering, procurement, and construction (EPC) spend, closing last year at $41.7 billion, close to 2019 levels.

Further analysis from the company showed that global rig contract fixtures, including options exercised, totaled 142 in the fourth quarter of 2021, representing 54,829 rig days, a 155 percent increase compared to the previous quarter, adding some much-needed optimism following a period of turbulence.

“Several major drilling regions, including North America, South America, and the Middle East have experienced minimal fallout. In fact, South America has fared particularly well, ending last year in better shape than before the pandemic,” Alex Middleton, Senior Market Analyst at Westwood, claimed.

“Brazil remained particularly buoyant, with high EPC spend coupled with no instances of contract cancellations resulting in continued drilling throughout the period,” Middleton added.

However, industry growth is globally uneven with Africa, Southeast Asia, and the North Sea falling behind due to the pausing of major drilling projects in response to political and legal uncertainty.

For instance, the controversial Cambo project in the UK West of Shetland was put on hold in the fourth quarter of 2021 after Shell announced it was pulling out of the development.

In response, Siccar Point Energy, the operator with a 70 percent interest, decided to pause the project since it couldn’t proceed with the original timescale.

According to Siccar Point, Cambo could deliver 170 million barrels of oil over 25 years, and 53.5 billion cubic feet of gas. Exploration licenses date back to 2001 and the current license is due to expire in March 2022. The UK government is required to approve drilling.

“For these regions, contracted rigs have been on a downward trajectory, hitting rock bottom at the close of 2020. Drilling projects have been halted amidst uncertainty, however, there are several major projects on the horizon that, if picked up, could help drive a recovery,” Middleton concluded.

To contact the author, email bojan.lepic@rigzone.com