Page 18: of Offshore Engineer Magazine (Nov/Dec 2024)

Read this page in Pdf, Flash or Html5 edition of Nov/Dec 2024 Offshore Engineer Magazine

MARKETS RIGS

Ofshore Drilling Upcycle

Continues, but 2025 will be a Year of Market Corrections 2024 has been another strong year for the ofshore drilling rig market with high utilization and dayrates. However, the winds of change have started to blow, and the market is already showing some signs of weakening demand and declining dayrates across the three main rig types – jackups, semisubs and drillships.

Infationary pressures across the sector are the driving force of the market correction we expect to see in 2025.

By Cinnamon Edralin, Americas Research Director, RigLogix estwood expects full-year 2024 marketed by supply chain challenges resulting in long lead-times for committed utilization, which considers parts and equipment. In some cases, feld development actively marketed rigs with charters un- components have been delayed to the point that the tim- derway or already booked with future start ing for the related development drilling also needs to be

W dates, to come in around 92%. This is down from 94% in postponed until the components are ready to go.

full year 2023 but is still a strong rate indicating tight rig While the slowdown in demand is being felt worldwide, availability. For 2025, Westwood is forecasting a lower mar- the decline is not as steep in the Global South, which is a loose keted committed utilization rate of 89%, with the semisub grouping of countries considered to be “developing”, many market to be the hardest hit of the three rig types. of which are located in the Southern Hemisphere. Going for-

Westwood’s top three predictions for 2025 are that there ward, offshore rig demand is expected to grow in areas such will be a slowdown in global rig demand, a pickup in rig as Latin America, Africa and India, offsetting some of the de- attrition, and downward pressure on dayrates. mand loss in locations like the North Sea more recently, and the US Gulf of Mexico shallow-water shelf, which has been on the decline for many years. This is in line with expected 1. Slowdown in rig demand, but Global South to dominate going forward global energy demand expectations. South America will con-

By the second half of 2024, signs of slowing demand tinue to lead global foating rig demand, and the Middle East were already being felt, as several projects with pending will remain the dominant driver of jackup demand.

fnal investment decisions were pushed out, and drilling campaigns with tentative start dates in late 2024 and ear- 2. Rig attrition will pick up, particularly for semisubs ly 2025 were delayed. Given that we are seeing demand The drop in offshore rig demand will then lead to an in- delays rather than demand destruction through project crease in attrition decisions. Westwood expects the semisub cancellations, is an indicator that the market is entering a segment to lose the most of the three rig types next year, as correction phase and the upcycle continues. Rising proj- this rig segment continues to fall out of favor in most foat- ects costs, of which rig dayrates are only one part, are one ing rig regions, with the exceptions being the North Sea and of the main contributing factors, along with delays caused Australia, where semisubs are preferred over drillships. As the 18 OFFSHORE ENGINEER OEDIGITAL.COM

Offshore Engineer