Offshore drilling units market in 2020

By Administrator on Dec 22 in Offshore Drilling, Offshore Oil and Gas, Useful Information.

Robotic systems, complex software and hardware technologies and a number of other modern technological solutions are used in oil and gas drilling today, in order to optimise the control and to improve the production capabilities. What is even more, the steady and ever growing demand for fossil fuels has pushed the offshore oil production industry to drill deeper and deeper now reaching water depths exceeding 300 metres.

The globalisation together with the energy security concerns, the ever increasing industrialisation, and the rising economic wealth of the developing world is leading to the need for more and more offshore oil and gas rigs laying the path for the expected positive growth of the offshore drilling units market in the upcoming years.

According to the latest forecasts, over the next 5 years the global offshore oil and gas drilling industry is expected to grow at more than 9.5%, which in turn is expected to increase demand and give a boost to the offshore drilling units. The offshore projects that are expected to witness the biggest growth are the deepwater and ultra-deepwater oil and gas rigs, with the main players here being Nigeria, Brazil and some others.

By Application, the offshore drilling market is divided into several segments, with the main ones being shallow water, deepwater and ultra-deepwater and also by Geographic areas, spread amongst North America, the countries from the Asia-Pacific region (APAC), Europe, Middle East and Africa (MEA) and South America.

With regards to the major offshore drilling units manufacturers, the list of the big names includes Samsung Heavy Industries Co. Ltd, Keppel Corporation Limited and Sembcorp Marine Ltd. As to the main key-players of offshore drilling in 2020 the top contractors’ list features Maersk Drilling, Transocean Ltd, Diamond Offshore Drilling Inc., Seadrill Ltd., Aban Offshore Limited, Ensco PLC, Nabors Industries Ltd, Pacific Drilling SA, Rowan Companies PLC and Noble Corporation.

(Jackup drilling rig)Image source:Workoffshore.net

According to the global consulting company McKinsey & Company, the offshore drilling units market seems suitable for medium and long-term growth. This is due to the fact that the private facility operators are shifting their focus to deepwater areas mainly because of the increase in price of risk-free drilling of shallow water sites, and demand for mobile equipment. Following this trend, the use of the facilities will be restored to over 80% by 2023 due to the large number of sites being decommissioned and the continued postponement of orders.

McKinsey & Company expects offshore drilling units to account for about 30% of the crude oil production, with approximately half of the total offshore areas coming from deepwater oil and gas rigs. Key areas for this growth will be the Gulf of Mexico, Africa and Brazil. Supply is expected to remain stable until 2026. By the mid 2020’s, supply growth under long-term contracts is expected to reach just over 12%.

Of course 2020 turned out to be quite an unprecedented year and very few if any seem to have been able to predict the current unfortunate events due to the Coronavirus situation. The global Covid-19 pandemic has hit the world economy by storm and the offshore drilling units market is not an exception.

Even before the COVID-19 pandemic of 2020, the oil drilling industry has been experiencing problems mainly due to high expenses and the emergence of the less expensive US shale oil. However, the discovery of new oil depositions just off the coasts of Africa and South America sparked the interest of oil companies in deepwater and ultra-deepwater drilling projects which gave a boost to offshore activities a couple of years ago.

Several of the biggest offshore drilling companies, Seadrill Ltd., Diamond Offshore Drilling Inc., Valaris Plc., and Noble Corp., have started debt restructuring negotiations and sought protection from their creditors, which could lead to bankruptcy if being unsuccessful. The disruption in the oil drilling industry will change the scenery in many different ways, with many existing company structures unlikely to keep the same agenda. This year, the number of offshore drilling units is expected to reach its lowest level since the mid 1980’s, as oil companies terminate or postpone some of their contracts.

Nevertheless the current pandemic situation, the offshore drilling units industry is expected to undergo a huge number of advancements over the next several years mainly due to continuous developments in the oil industry coupled with growing demand for exploration and production.

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