DEEP-water rig demand in sub-Saharan Africa is increasing steadily, driven by continued high oil prices combined with pre-salt and exploration successes in West Africa plus deep-water wildcatting successes off East Africa.
According to investment house Morgan Stanley, as of last week 33 floaters were available in West Africa, where the utilisation rate stood at 85%.
Terry Bono, head of marketing at rig giant Transocean, told analysts last month that in the ultra-deepwater market, limited availability in 2012 “is pushing rates up quickly” with short-term needs resulting in rig rates of about $600,000 per day.
Eight recent contracts were secured, with Tullow Oil and Chariot Oil & Gas paying top dollar dayrates of $596,000 and $560,000, respectively, to secure Ocean Rig’s drillship Olympia for work off Ghana and semi-submersible Maersk Deliverer for wildcatting in Namibia.
Bono says significant pre-salt discoveries in Angola and major finds off East Africa will drive near-term demand in addition to outstanding tenders that remain unfulfilled. He says West African operators are showing interest in two deep-water drillships that Transocean is having built in South Korea.
“If we look at West Africa alone, I think a recent study said oil companies need 20 more rigs in 2012… and that doesn’t (take into account) the recent discoveries in the Angolan pre-salt. So we’re very optimistic about 2012 and 2013,” Bono says.
Seven deep-water units — four drillships and three semisubs — are needed to start operations off Angola in 2013, two for Total and one each for Petrobras, Eni, Cobalt, Maersk Oil and Statoil.
Nigerian requirements include a drillship and a semisub for Total plus one semisub each for Shell, ExxonMobil and Sinopec.
Total and China National Offshore Oil Corporation are each seeking a floater for work in Congo-Brazzaville, while HRT Oil & Gas and Petrobras both need a semisub for Namibia. Eni is hunting down a unit for Togo and China National Petroleum Corporation wants a semisub for Equatorial Guinea.
More speculative West Africa requirements, suggests Morgan Stanley, include floaters for Mauritania (Tullow), Senegal (Far), Gambia (African Petroleum), Guinea-Bissau (Supernova), Sierra Leone (Elixir, Lukoil, Talisman, Repsol), Ivory Coast (Total), Ghana (Tullow, Tap Oil), Nigeria (Allied Energy, Chevron), Nigeria-Sao Tome JDZ (Sinopec), Equatorial Guinea (Sipco, Repsol, White Rose, Vanco), Gabon (Harvest Natural, Total, Vanco, Ophir), Congo-Brazzaville (Perenco, Murphy), Angola (BP), Namibia (Chariot, Sintezneftegaz, Arcadia) and South Africa (unknown).
Possible East African fixtures include Kenya (Apache, BG Group), Tanzania (Ophir, Heritage Oil, Aminex, Petrobras, Hydrotanz), Madagascar (ExxonMobil, Sterling Energy, Niko), Mozambique (Petronas, Sasol) and the Seychelles (Afren).
Further opportunities For Transocean, recent mid-water floater fixtures secured dayrates of between $260,000 and $280,000, with Bono expecting to secure “further contracting opportunities through 2012 and 2013 at improving dayrates” in West Africa.
Norwegian deep-water specialist Seadrill also sees a buoyant floater market round the corner, saying demand is “particularly strong” in West and East Africa.
David Rabun, Ensco’s chief executive, agrees, telling investors that “the African market continues to tighten with multiple operators looking for deep-water rigs in late 2012 to mid-2013 against an environment with little visible rig supply”.
Rabun says Angola, Gabon and Equatorial Guinea “continue to generate new drilling opportunities, as do new basins off East Africa, while pre-salt basins off Angola, Congo and Gabon are providing our clients with a high-impact plays”.
Michael Acuff, Diamond Offshore’s marketing head, says: “There is strong demand in West Africa from the ultra-deepwater to deep-water sectors.”
Adding to the spicy floater sector, West African jack-up demand is also on the up on the back of a broadly more active global market. “That dayrates are on the rise is evidenced by lower-specification jack-ups receiving rates of about the $130,000 mark in West Africa,” says Bono.
Promising outlook The outlook for newbuild jack-ups is also promising, Bono says, citing a contract Transocean secured with Chevron in Angola for a three-year term at $149,000 per day.
Nevertheless, as of last week, the jack-up market was not as jaunty as its floater equivalent, with a West African utilisation level of about 60% from a fleet of about 35 units, says Morgan Stanley. Despite this excess supply, dayrates are increasing, says Rabun, especially for higher-end units.
He says that because work programmes tend to be short term, up to 12 jack-ups may be available in the next six months in the region, although he adds that long-term opportunities lie in Nigeria, Angola and possibly Gabon.
French giant Total is again at the forefront of rising jack-up demand, driven by its new exploration-focused growth strategy, and is looking to charter two rigs for operations in Nigeria.
Other outstanding requirements are for India’s Essar Oil in Nigeria, Chevron off Angola and Eni in Gabon.