Page 30: of Offshore Engineer Magazine (Mar/Apr 2026)

29 31

MARKETS GULF NOCs AND MODU OPERATORS

GULF NOCs AND MODU

OPERATORS LOOK TO

CONTRACTUAL RESILIENCE

TO RIDE OUT DISRUPTION

Continued idling of assets should the confict persist would see wider

MODU market tightening as drillers and NOCs manage capacity.

By Todd Jensen, Associate Director, MSI he impact of the war in the Middle East on the aggressive convenience clauses, leaving many of the vessels offshore energy sector has so far received less at- subject to the 30-day convenience clause and thus without tention than the attacks on ships and oil storage pay for a majority of this period.

and loading facilities. Nonetheless, the violence

T has already directly impacted MODU owners with at least • Long-term confict (>6months) one operator announcing it had evacuated workers from Long-term this Scenario would see a similar impact to four drilling rigs in the Middle East but confrming the that outlined in Scenario 2, however, once the SoH re- rigs were still under contract and insured. opened, activity would increase again. Delays would be

In its Q1 2026 MODU Market Report, MSI has con- likely for some oil & gas projects in the region, as oil structed three scenarios to put the potential impact into production will be restored from shut-in felds frst. The context for OSV and MODU owners. short- to mid-term impact on OSV and MODU owners would be signifcant, with the impact easing as the confict • Quick resolution (<1 month) plateaus, provided the SoH re-opens.

Limited impact on OSV and MODU owners, the North The structure of the Middle East MODU market,

Field being under force majeure would have seen OSV and where roughly one-third of the global jack-up feet is con-

MODU activity in Qatar reduced to a minimal role thus centrated and where activity is anchored by national drill- reducing utilization. However, the duration of the impact ing champions such as ADES Holding, Arabian Drilling, would have been brief enough to allow for a quick recov- ARO Drilling and ADNOC Drilling, creates a contractual ery, crews would be reduced to skeleton crews to allow es- environment that is structurally more resilient to short- sential work to be carried out but contract cancellations term geopolitical disruption. would not be expected. OSV owners may be requested to accept standby rates as operators look to cut costs. Long-duration drilling programs tied to NOCs including

Saudi Aramco, ADNOC, and QatarEnergy tend to incor- • Mid-term confict (~6 months) porate strong termination and operational continuity claus-

A signifcant reduction in OSV and MODU demand es. As a result, we believe outright contract cancellations in in the Middle East as felds are shut-in. OSVs and MO- the early stages of a regional escalation are improbable.

DUs would also be unlikely to be able to leave the Gulf Operators typically prioritize maintaining reservoir with the Strait of Hormuz (SoH) closed to vessels. This management and development drilling continuity, mean- would result in a signifcant impact on OSV and MODU ing contractual remedies would more likely manifest owners with the contracts in the Middle East having quite through temporary suspensions, force majeure interpreta- 30 OFFSHORE ENGINEER OEDIGITAL.COM