Multiple Drilling Deals Secured in the Middle East, Mediterranean

A flurry of activity has resulted in several long-term contract extensions.

Source: ADNOC Drilling

A strong offshore rig market, as evidenced by its higher day rates, is keeping rig brokers in the Middle East and the Mediterranean busy, with recent contracts and extensions securing rigs under long-term contracts.

Italian energy industry services firm Saipem said on 26 June that it had secured two extensions from undisclosed parties—one in the Middle East and the other in the Mediterranean Sea—worth around $550 million dollars. 

The company successfully extended the ongoing activity of the Perro Negro 7 jackup drilling unit in the Middle East with a 10-year contract extension secured because of the unit's excellent performance, according to Saipem.

The Perro Negro 7 is a high-specification, self-elevating triangular mobile drilling unit capable of operating in water depths up to 375 ft and drilling up to 30,000 ft. The extension is a milestone because it has only been granted to an international contractor on limited occasions, according to Saipem.

The drilling contractor noted in the release that its recent expansion into the area—growing from three rigs in 2021 to seven expected rigs by the end of 2023—demonstrates its “commitment to executing projects efficiently with attention to safety and the environment in the main ‘shallow water’ market worldwide.”

Saipem also will utilize Scarabeo 9, a sixth-generation semisubmersible drilling rig capable of operating in ultradeep water up to 12,000 ft in the Mediterranean Sea with an estimated contract period of around 6 months plus an optional period. 

Five More for ADNOC Drilling
Another major regional announcement comes from the UAE-based ADNOC Drilling. The state-owned drilling company has the largest fleet of rigs in the region and has spent the past 2 years incrementally growing the fleet.

The drilling contractor fast-tracked its fleet expansion program—with the goal of extending its total owned fleet to 142 units by 2024—in support of the state-owned Abu Dhabi National Oil Company’s (ADNOC) target to raise production capacity to 5 million B/D in 2030. Since its listing on the Abu Dhabi Securities Exchange in October 2021, ADNOC Drilling has rapidly expanded its fleet of rigs from 95 to 115 owned rigs, according to its website.

On 23 June, the drilling contractor said it had secured five long-term drilling contracts worth about $2 billion from ADNOC to support its growing drilling operations.

The drilling contractor said that “the client agreed to the contractual terms, mostly the duration, considering the strength of the offshore jackup market with higher day rates.”

The contracts charter high-specification, premium jackup rigs, and all required manpower and equipment and support drilling operations across five fields in its offshore portfolio. These rigs will have battery energy storage systems to enhance efficiency and reduce emissions.

ADNOC Drilling noted that these rig acquisitions are part of the company’s fast-tracked rig fleet expansion program. The new rigs—Salamah, Al Saadiyat, Al Sila, Ramhan, and Yas—will be among the most capable, high-specification rigs operating in the Arabian Gulf.

The new rigs are central to ADNOC Drilling’s rigorous decarbonization strategy and the company’s commitment to supporting ADNOC’s target to reduce greenhouse gas intensity by 25% by 2030, as well as the UAE Net Zero by 2050 strategic initiative.
“We are pleased to have been awarded these important contracts. Long-term contracts like these are the backbone of our business model, providing a clear line of sight on future earnings,” said Abdulrahman Abdulla Al Seiari, ADNOC Drilling chief executive.

“As we continue to grow our fleet, our shareholders will benefit from the opportunity to be directly invested in ADNOC’s accelerated production capacity growth, which drives faster revenue growth and progressive, long-term shareholder returns while responding to the world’s rising energy demand," he said.

The rigs will progressively start their operations at the end of 2023, generating significant revenue in 2024 and full-year revenue contribution from 2025, included in the company’s full-year 2023 and medium-term guidance.

The $2 billion contract award follows more than $11.5 billion in long-term contracts announced since the beginning of 2022, according to ADNOC Drilling.