Uptick in enquiries, now that oil prices have stabilised

But industry veterans say the supply overhang might stymie a return to profitability by the offshore drilling sub-sector

Published Mon, Jul 4, 2016 · 09:50 PM

sembcorp marine

Singapore

OFFSHORE drilling, being at the forefront of the offshore-&-marine value chain, would be the first sub-sector to experience an uptick in activity when exploration and production spend goes up.

And now that oil prices have stabilised in the US$40 to US$50 band, enquiry volumes have indeed been observed to have risen, especially in Q2.

However, seasoned industry observers have cautioned that the huge supply overhang clouds the chances of the sub-sector returning to profitability.

Ian Craven of Icarus Consultants noted that oil companies have been enquiring about indicative day rates for work next year and the year after, but that few contract awards have so far materialised.

One contract widely seen as likely to be finalised this year though, is that for a development-drilling campaign in the offshore fields earmarked to feed BP's Tangguh Train 3 project. Mr Craven named KS Drilling as a frontrunner for this five-year …