Chinese Yards Attracts More Orders for Newbuild Jackups
Competition is intensifying in Asia’s rig construction market with Chinese shipyards winning more new orders as their more established rivals in Singapore delivered a record number of newbuild jackups last year.
The heightened interest in contracting Chinese yards has been helped by a firm outlook for the global jackup market, leading some firms, especially investment companies, to hire these relatively inexperienced yards to construct newbuild jackups at competitive prices.
Strong Jackup Demand
Global demand for newbuild jackups is poised to grow as the fleet ages and over half, or 53 percent of these rigs are over 30 years old, Ensco plc said in a December 2013 investor presentation. In a November 2013 presentation to investors, estimates from Transocean Ltd. revealed that 216 jackups are now over 30 years old and “customers [are] actively replacing lower-spec jackups”.
A fairly stable global demand for jackups, with utilization rate assessed by Rigzone’s RigLogix database at 80.6 percent, down slightly from 83.2 percent a year ago, and better day rates may encourage companies to build new jackups as demand for ageing units slows.
However, rising construction costs for jackups and shipyard/equipment provider constraints served to cap additional newbuild jackup orders, Ensco said. Such constraints, especially higher costs, could have led some firms to switch from contracting Singapore rig builders to relatively new players in China.
More orders helped Chinese shipyards to emerge as the top global rig building destination in 2013, according to Religare Capital Markets. China received 32 percent of the world’s new jackup construction orders, compared to 26 for Singapore rig builders, who had seen their overall market share shrunk from 33 percent in 2012.
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