Chinese government-run Beijing Guohai Offshore Engineering Assets Management has started marketing offshore drilling rigs stranded at Chinese yards, though it has not yet received offers attractive enough to accept.

Guohai Offshore was established by the State Council’s Assets Supervision & Administration Commission two months ago in Beijing with the task to market and manage offshore rigs abandoned by owners and managers, but now stacked at Chinese yards.

The rigs now under Guohai’ s management, including the Tiger units ordered by Reignwood and built by Shanghai Shipyard, are being marketed to oil companies and drilling contractors, including Petrobras of Brazil and Pemex of Mexico, as well as contractors in the Middle East.

However, sources said that, in a market where rigs remain over-supplied, potential buyers are trying to take advantage of Guohai’s eagerness to sell or charter rigs by offering low prices.

One recent offer said to have been made by OOS Energy for the Tiger 1 drillship was about $100 million, a price that sources said Guohai rejected without hesitation.

Sources added that the contract value for Shanghai Shipyard to build four Tiger drillship was $1 billion, with Reignwood having paid 15% for the first and 10% for each of the following units.

The Tiger drillships are capable of working in water depths of up to 5000 feet and drilling to a depth of 31,500 feet. The four mid-water drillships were ordered at the top of the market but have since struggled to find work.

The first unit is now ready for operations, while the second is nearing completion, but the construction of the other three units has been halted.

Other sources said that Tiger 2 has been offered to Petrobras at a rate of $30,000 per day, a proposal apparently rejected by Guohai.

In January, Pemex chose a consortium of its own drilling services division in collaboration with Mexican service company Marinsa to provide the Tiger 1 for a campaign on acreage adjacent to Talos’ Round 1.1 Block 7 that is planned to run for almost 50 months.

OOS Energy was said to be lined up to provide the drillship as well as vessel management and drilling support to Marinsa and PPS (Pemex Drilling).

The charter was delayed but Pemex is said to still be interested in chartering Tiger 1, with talks being carried out between Guohai and Pemex.

Last October, Tiger 1 finished a third set of sea trials in preparation for its debut drilling job before sailing to Singapore for mobilisation.

Rig players suggested that buyers may find it difficult to convince Guohai to sell, lease or charter the rigs at a steep discount, as a decision to sell them cheap will need collective approval of government asset managers.

About a dozen of the 88 rigs stranded at Chinese yards have been chartered since 2018, mostly for operation offshore by China Oilfield Service Ltd.

Most of the rigs were built by China’s top seven state-owned yards — CIMC Raffles, Shanghai Zhenhua Heavy Industries, Cosco Qidong Shipyard, Shanghai Waigaoqiao Shipbuilding, China Merchant Heavy Industry (CMHI), Dalian Shipbuilding Industry Offshore (DSIC Offshore) and Cosco Nantong Shipyard.

Chinese yards won the contracts by offering low prices and easy terms, elbowing out rival yards in Singapore and South Korea.

These yards are now saddled with huge debts after speculators cancelled contracts, leaving the yards to pay for construction of the rigs as offshore drilling activity nosedived.

Guohai Offshore is incorporated by seven stakeholders — Beijing Chengtong Technology & Innovation Investment with 25%, CNOOC Investment Holding with 25%, and China State Shipbuilding Corporation, COSCO Shipping Heavy Industry, CSIC, China Merchant Group Offshore Engineering Investment and China Communications Construction Corporation each with 10%.

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China's Guohai starts to market stranded rigs