Rig utilization in Southeast Asia set for decline, Rystad’s analysis shows

Southeast Asia’s rig market, which was poised for growth in 2020, is now set for a decline. Several oil companies have already made significant cuts to their 2020 capex budgets due to the impact of the Covid-19 pandemic and the ongoing oil price war, a Rystad Energy’s analysis shows.

A jack-up rig; Author: SP Mac

According to Rystad Energy, E&Ps in Southeast Asia have been very cautious by locking in rigs on long-term contacts, making it unlikely that options will be exercised.

Rystad sees that if no new contracts are signed and no options are exercised for the remainder of 2020, utilization will drop by 54% in the region from March to December. This translates to an 18% year-on-year drop from 2019 levels.

Of the options in the regional market for 2020, 40% are for work with Petronas. Therefore, market development this year will be quite dependent on the volume of options that Petronas decides to exercise.

Petronas is proactively striving to keep operations running as smoothly as possible, and rigs with local crews might not be greatly inhibited. However, after the recently announced two-week extension of the lockdown in Malaysia, several rigs operating in the country are expected to gear down activity in the next few weeks due to crew timeout.

Most of the planned drilling programs in Southeast Asia this year are comprised of brownfield work, and Rystad expects operators to reduce their drilling budgets most within the infill drilling segment.

“On a slightly more positive note, existing rig contracts probably face less danger of being terminated in Southeast Asia – where national oil companies tend to support the national drilling contractor – than in other regional markets. That is not to say there won’t be any contract terminations, but we expect the intensity to be lower than it is globally,“ said Rystad Energy’s senior oilfield service analyst, Jo Friedmann.



Looking at activity in the coming year, lower oil prices are expected to slow sanctioning activity in the region, meaning less demand for drilling and completion services, as well as for offshore oilfield services in general. During the previous downturn, the pace of sanctioning long-cycle deepwater projects slowed, and Rystad expects this trend to be repeated.

New deepwater projects currently under evaluation by operators in Southeast Asia are likely to face delays, though there hasn’t been any direct communication from operators yet to this effect. The Limbayong project in Malaysia, Abadi in Indonesia, Shew Yee Htun in block A6 in Myanmar, and the Kelidang Cluster in Brunei, are all considered to be at risk in the current oil price environment.

“The oilfield service industry is now far more fragile than it was in 2014. The expected reduction in activity will, in all likelihood, translate into lower prices – and this will probably happen sooner rather than later, “ added Friedmann.

Reports suggest that operators are asking service companies for a 20% to 25% reduction in pricing globally, a trend Rystad expects to see in Southeast Asia as well. Should the oil price and virus issues persist for six months or more, we could again see a race to the bottom, with rig rates plummeting towards operational expenditure levels.

For players in the Southeast Asian well services segment, unit prices have not grown as quickly in recent years as they have for drilling contractors, and therefore a smaller price drop is expected.


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Maersk drillship’s gig with Tullow cut short

Danish offshore drilling contractor Maersk Drilling has received a notification from Tullow Oil of early termination for convenience of the drilling contract for the drillship Maersk Venturer.

Maersk Venturer drillship; Source: Maersk Drilling

Maersk Drilling said in a statement on Tuesday that the drillship Maersk Venturer has been working for Tullow offshore Ghana since February 2018.

The contract, signed in late 2017, was for development drilling on the Jubilee and TEN fields offshore Ghana. It was expected to end in February 2022. However, following Tullow’s early termination decision, the rig is now expected to end the contract in June 2020.

As a consequence of the termination, Maersk Drilling’s revenue contract backlog is reduced by $175 million covering the period from the end of the contract to February 2022.

Subject to commercial prospects, Maersk Drilling said it would take measures to reduce Maersk Venturer’s operating costs following the end of the contract.

Maersk Drilling maintains the profitability guidance for 2020 of EBITDA before special items of $325-375 million.


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Prosafe to claim full contract value after EnQuest cancels rig mobilization

Following EnQuest’s cancellation of mobilization of the Prosafe-owned Safe Zephyrus accommodation rig in the North Sea, Prosafe has said it will claim the full value of the contract. 

Safe Zephyrus; Source: Prosafe

Prosafe on Monday provided an update on its ongoing operations and contracts in light of COVID-19 and the oil price crash.

According to the update, the Safe Concordia flotel is on location and dayrate, although client personnel has been demobilized. The Safe Concordia is under a contract with Equinor in Brazil.

Further, both Safe Notos and Safe Eurus flotels have been disconnected and client personnel demobilized. Both accommodation rigs are on a 95% stand-by dayrate.

The Safe Notos has been operating on a three-year and 222-day contract for Petrobras in Brazil since December 7, 2016.

The Safe Eurus is also under a contract with the Brazilian Petrobras. Awarded in May 2019, the three-year firm contract started in 4Q 2019.

Finally, the Safe Zephyrus rig was ready to mobilize from Averøy in Norway to support the Thistle project for a 21-day firm period, but was instructed by client on March 20 not to mobilize.

Prosafe said it would claim full contract value, ca. $2 million.

To remind, Prosafe was earlier in March awarded a contract to provide accommodation in support of EnQuest’s redundant subsea tank removal and safe re-habitation of the Thistle Alpha platform in the UK North Sea.

However, as the situation with the coronavirus as well as the oil price crash developed, EnQuest said last week it would not re-start production at the Heather and Thistle/Deveron fields.

Namely, as a response to the current market situation, EnQuest decided to reduce its costs. For 2020, the company is targeting base operating expenditure savings of c.$150 million, which would lower operating costs by c.30% to c.$375 million.

Offshore Energy Today Staff


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Equinor cleared to drill wildcat well in North Sea

The Norwegian Petroleum Directorate (NPD) has given Equinor a drilling permit related to the drilling of a wildcat well in the North Sea off Norway. 

Transocean Norge, formerly known as West Rigel; Source: Equinor

The NPD said on Friday that the 34/7-E-4 AH wellbore would be drilled from the Transocean Norge drilling rig.

The drilling program for wellbore relates to the drilling of a wildcat well in production license 089 where Equinor is the operator with an ownership interest of 41.5 percent.

Other licensees are Petoro, Vår Energi, Idemitsu Petroleum, and Wintershall Dea with 30, 16.1, 9.6, and 2.8 percent stakes respectively.

The area in this license consists of parts of block 34/7. The well will be drilled just southwest of the Snorre field.

Production license 089 was awarded on March 9, 1984, in the 8th licensing round on the Norwegian shelf. This well is the 41st exploration well to be drilled in the license.


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Worldwide offshore rig count in February down two rigs year-over-year

The worldwide offshore rig count in February 2020 has risen by two units sequentially, but dropped by the same number year-over-year, according to a rig count report by Baker Hughes Company.

lllustration; Author: SP Mac (under permission from the photographer)

BHGE splits its rig counts into international and North America rig counts, which combined make the worldwide rig count.

The international rig count for February 2020 was 1,085, up 7 from the 1,078 counted in January 2020, and up 58 from the 1,027 counted in February 2019.

The international offshore rig count for February 2020 was 245, unchanged from the 245 counted in January 2020, and down 5 from the 250 counted in February 2019.

Looking at separate regions, the Asia Pacific region had the highest number of offshore rigs during February 2020, totaling 91 units – the same as in January 2020. This is down 14 rigs from 105 in February 2019.

In the Middle East region, there were 54 rigs active during February 2020, down four from January 2020 as well as February 2019.

Latin America took third place in the offshore rig count for February 2020 with 37 active units after a long time of Europe holding that spot. Europe dropped to fourth with 32 and Africa was fifth with 31 active units.

The average U.S. rig count for February 2020 was 791, unchanged from the 791 counted in January 2020, and down 258 from the 1,049 counted in February 2019.

The average Canadian rig count for February 2020 was 249, up 45 from the 204 counted in January 2020, and up 19 from the 230 counted in February 2019.

The worldwide rig count for February 2020 was 2,125, up 52 from the 2,073 counted in January 2020, and down 181 from the 2,306 counted in February 2019.

The worldwide offshore rig count for February 2020 was 270, up two from 268 in January 2020, and down two from 272 in February 2019.



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Shell extends North Sea contract for Prosafe flotel

Offshore accommodation specialist Prosafe and oil major Shell have agreed on a contract extension for one of Prosafe’s units for operations in the UK North Sea.

Safe Zephyrus
Safe Zephyrus; Source: Prosafe

Prosafe said on Monday that it had agreed with Shell to amend the original June 1, 2020, start date of the Safe Zephyrus at the Shearwater platform to May 2, 2020, by extending the contract by 30 days.

Safe Zephyrus completed its contract for BP at Clair Ridge in the West of Shetland on October 15, 2019, and it has been in lay-up ever since.

The flotel was supposed to mobilize for the 80-day Shell Shearwater contract in 2Q 2020. However, Shell has decided to exercise its 30-day option in the contract and the timing for the rig’s contract start date has now changed.

Safe Zephyrus is a DP3 semi-submersible accommodation rig. With beds for 450 persons, in single man cabins, the vessel is designed for worldwide operations in the harshest offshore environments.

Safe Zephyrus, a sister ship to the Safe Boreas, was built at Jurong Shipyard, Singapore, to the GVA 3000E design and is equipped with a DP3 system and 12-point wire mooring arrangement providing maximum cost efficiency and flexibility. It was delivered in 2016.

The unit was granted the Acknowledgement of Compliance (AoC) from the Norwegian Petroleum Safety Authority (PSA) on July 19, 2016.

Offshore Energy Today Staff


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Ex-consultant connected to Sembcorp Marine convicted of corruption in Brazil

A former consultant connected to Singapore’s offshore rig builder Sembcorp Marine has been convicted of corruption and money laundering in a case related to a drilling rig construction contract with Brazil’s drilling contractor Sete Brasil.

Estaleiro Jurong Aracruz yard; Source: Sembcorp Marine

The Brazilian Federal Prosecutors (MPF) arrested Guilherme Esteves de Jesus (GDJ) in 2015 and in 2017 brought criminal charges against him.

Companies connected to GDJ were engaged by Sembcorp Marine’s subsidiaries as consultants in Brazil.

Those charges alleged, among other things, that GDJ made certain payments in connection with contracts entered into in Brazil by certain subsidiaries of the company. GDJ is connected to the consultant engaged by the company’s subsidiaries in connection with the drilling unit construction contracts for subsidiaries of Sete Brasil. GDJ defended the charges throughout the criminal proceedings against him.

The company has learnt on February 20, 2020, that GDJ has been convicted by the Federal Courts of Curitiba of the crimes of corruption, money laundering and participation in a criminal organization. GDJ was sentenced to 19 years and 4 months in prison and was also fined.

SembMarine earlier in February informed that the MPF had filed further charges against GDJ for money laundering. This proceeding is still ongoing.

As previously reported, the MPF has also filed charges against Sembcorp Marine’s ex-employee Martin Cheah Kok Choon for money laundering and corruption in connection with certain drilling rig construction contracts entered into by subsidiaries of the company with Sete Brasil in 2012.

Other than Martin Cheah, the former President of Estaleiro Jurong Aracruz (EJA), the company’s Brazilian subsidiary, the company said it was not aware of any other employee past or present of the company that is a subject of the ongoing investigations by the Brazilian authorities related to Operation Car Wash.


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Masirah flows first Yumna oil into tanker

Exploration and production company Masirah Oil has completed the Yumna 1 well and flowed first oil into an Aframax tanker. The well is located in Block 50, 30km offshore east Oman. 

Bull Papua tanker; Source: PT. Buana Lintas Lautan, Tbk

Masirah awarded a contract to Foresight Offshore Drilling to use the Foresight Driller IX drilling rig for the appraisal well on Block 50 in early November 2019.

Later that month, Masirah also awarded a contract to Wings Offshore for the floating storage and offloading (FSO) vessel, Mt Bull Papua, to be used on the Yumna field. The Mt Bull Papua is an Aframax tanker with a storage capacity of 750,000 barrels.

The well was spud on December 26, 2019.

In an update released earlier this week, Masirah said that the well came in as expected and confirmed the updated reservoir model.

The Yumna 1 well has tested at a production rate of 11,843 stock tank barrels of oil per day through a 1-inch choke, with a crude oil gravity of 42 degrees API. The Yumna field is being further appraised with an extended early production test.

The company also stated that further data evaluation and testing would be done and its findings would be released when completed.

Masirah is an 86.37 percent owned subsidiary of Singapore’s Rex International.

Commenting on Masirah’s update, Dan Broström, Executive Chairman of Rex International, said: “We are very happy with the successful results from the Yumna 1 well and are pleased to play a part in opening up a new frontier offshore, east of Oman. We expect the high level of activity to continue as we move forward in the block. We thank the Ministry of Oil & Gas in Oman for their support and help in this endeavor.”

Offshore Energy Today Staff


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Green light to Lundin for Barents Sea wildcat

The Norwegian Petroleum Directorate has granted Lundin Norway a drilling permit for a well in the Barents Sea offshore Norway. 

West Bollsta drilling rig / Image source: Northern Drilling

The well 7221/4-1 will be drilled from Northern Drilling’s West Bollsta semi-submersible drilling rig.

The drilling program for well 7221/4-1 relates to the drilling of a wildcat well in production license 609.

Lundin Norway is the operator with an ownership interest of 40 percent. Other licensees are Idemitsu Petroleum Norge with 30 percent and Wintershall Dea Norge with 30 percent interest.

The area in this license consists of parts of blocks 7220/11, 7220/12, 7220/9, 7221/4 and 7220/6. The well will be drilled 12 kilometers east of the 7220/6-2 discovery.

Production license 609 was awarded on May 13, 2011, in the 21st licensing round on the Norwegian shelf. This is the 13th well to be drilled in the license.

It is worth reminding that Lundin  in February 2019 awarded a ten-well contract to the West Bollsta rig.


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January’s worldwide offshore rig count drops sequentially, but up 2 rigs year-over-year

The worldwide offshore rig count in January 2020 has dropped by 14 units sequentially, but rose by two units year-over-year, according to a rig count report by Baker Hughes Company.

lllustration; Author: SP Mac (under permission from the photographer)

BHGE splits its rig counts into international and North America rig counts, which combined make the worldwide rig count.

The international rig count for January 2020 was 1,078, down 26 from the 1,104 counted in December 2019, and up 54 from the 1,024 counted in January 2019.

The international offshore rig count for January 2020 was 245, down 12 from the 257 counted in December 2019, and up 3 from the 242 counted in January 2019.

Looking at separate regions, the Asia Pacific region had the highest number of offshore rigs during January 2020, totaling 91 units. This is down three rigs from 94 in December 2019 and down ten from January 2019 count of 101 rigs.

In the Middle East region, there were 58 rigs during January 2020, down one from December 2019 and down five from January 2019.

Europe took third place in the offshore rig count for the first month for 2020 with 36 active units, down three units from December 2019 and up five rigs from January 2019. Europe was followed by Latin America with 34 and Africa with 26 active units.

The average U.S. rig count for January 2020 was 791, down 13 from the 804 counted in December 2019, and down 274 from the 1,065 counted in January 2019.

The average Canadian rig count for January 2020 was 204, up 69 from the 135 counted in December 2019, and up 28 from the 176 counted in January 2019.

The worldwide rig count for January 2020 was 2,073, up 30 from the 2,043 counted in December 2019, and down 192 from the 2,265 counted in January 2019.

The worldwide offshore rig count for January 2020 was 268, down 14 from 282 in December 2019, and up two rigs from 266 in January 2019.


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