New analysis from energy market research and consultancy firm Westwood Global Energy Group shows a year-on-year growth for the global offshore rig market at the close of 2021, up 200% from 2020.

Westwood attributed the growth to significant engineering, procurement and construction (EPC) spend, closing last year at $41.7 billion, close to 2019 levels.

Westwood’s Global Offshore Rig Market report also shows that global rig contract fixtures, including options exercised, totaled 142 in the fourth quarter of 2021, representing 54,829 rig days—a 155% increase compared to the previous quarter, adding some much-needed optimism following a period of turbulence.

Westwood
(Source: RigLogix, Westwood Analysis)

“Several major drilling regions, including North America, South America and the Middle East have experienced minimal fall out,” Alex Middleton, senior market analyst at Westwood, said commenting on the report.

“In fact, South America has fared particularly well, ending last year in better shape than before the pandemic,” Middleton added. “Brazil remained particularly buoyant, with high EPC spend coupled with no instances of contract cancellations resulting in continued drilling throughout the period.”

Despite the growth in offshore investment, 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, the report noted.

For instance, the controversial Cambo project in the U.K. 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, operator with 70% 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 Bcf of gas. Exploration licenses date back to 2001 and the current license is due to expire in March 2022. The U.K. 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 said.

Westwood report accompanies the launch of RigLogix Advanced, an optional extension to Westwood's existing RigLogix solution designed to bring a greater level of clarity, knowledge share and data integration, allowing for more strategic and operational decision making.

Offshore