© 2014 IHS Information | Analytics | Expertise GLOBAL RIG AND OFFSHORE CONSTRUCTION MARKETS Slowdown on all fronts? OCTOBER 2014 Evgenia Kukina, Sr. Product Manager +44 (0)2031 593 380 [email protected]
© 2014 IHS
Information | Analytics | Expertise
GLOBAL RIG AND OFFSHORE
CONSTRUCTION MARKETS Slowdown on all fronts?
OCTOBER 2014
Evgenia Kukina, Sr. Product Manager
+44 (0)2031 593 380
© 2014 IHS
Content and Presentation Sources
2
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
Field Development Trends
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
3
© 2014 IHS
2/3 of global offshore finds in past decade were made in
Southeast Asia, Europe and Africa
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
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Global offshore discoveries 2004-present
SE Asia Europe Africa Latin America Australia/NZ North America Middle East CIS
© 2014 IHS
Those will be the regions that will drive demand
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
5
SE Asia 26%
NW Europe 22%
West Africa 12%
Latin America 11%
North America 9%
Middle East & Caspian 8%
Mediterranean 7%
Australia/NZ 5%
Offshore field development start-ups in 2014-2019
© 2014 IHS
Fewer project sanctions will lead to a reduction in new
projects in 2-3 years…
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Global Offshore FEED awards
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Global Offshore Field Development Projects
Completed Construction Planned Tendering
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
6
© 2014 IHS
… due to cost escalation and uncertainty over oil price
7
Prospects of lower oil prices
Weak demand growth
Rising costs
Tight contractor capacity
Less project sanctions
Postponements
Revisions
Decline in new orders
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
Only five subsea awards this year – the longest order
drought in years!
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
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2007 2008 2009 2010 2011 2012 2013 2014
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Global Subsea Tree Awards
© 2014 IHS
Construction Fleet
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
9
© 2014 IHS
Heavy lift fleet almost doubled in the past ten years
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Existing vessels Newbuilds
Global Heavy Lift Fleet Supply
The current fleet consists of 56 vessels, with 10 under construction
© 2014 IHS
Heavy lift market will remain heavily oversupplied…
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
11
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
5,000
10,000
15,000
20,000
25,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Uti
lisati
on
, %
Su
pp
ly/D
em
an
d,
vessel
days
Demand (vessel days) Supply (vessel days) Utilisation
© 2014 IHS
…unless older vessels are removed
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
12
0
5
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25
30
0-5 years 6-10 years 11-15 years 16-20 years 21-25 years 26+ years
© 2014 IHS
The pipelay market has seen a large number of newbuild
deliveries in the past ten years…
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
13
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© 2014 IHS
Increasing supply and slower demand for pipelay work
are affecting utilisation rates
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
14
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F
Uti
lisati
on
, %
Su
pp
ly/D
em
an
d,
vessel
days
Demand Supply Utilisation
© 2014 IHS
Utilisation rates for deepwater vessels will stay at a
healthy level
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
15
0%
20%
40%
60%
80%
100%
120%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F
Harsh&Deep Shallow&Benign Whole Fleet
Offshore pipelay utilisation by vessel type (2004-2018)
Rig market
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
16
© 2014 IHS
Floating rig market will weaken in the next two years due
to newbuild deliveries and poor demand
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
17
-2
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30
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45
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55
Jan
Feb
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Jun
Jul
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Sep
Oct
No
v
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Jan
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Ma
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Ma
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Jun
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No
v
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Jan
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Ma
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Apr
Ma
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No
v
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2014 2015 2016
Rig
su
rplu
s
Rig
dem
an
d/s
up
ply
NW Europe semis supply and demand 2014-16
Demand Total supply Marketed supply Marketed surplus
© 2014 IHS
Indicators of market change from IHS publications
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
- Chevron looks for cost cuts on Rosebank (European Rigs Newswire - 25 November, 2013)
- Alarm bells ring over UK exploration decrease (European Rigs Newswire - 26 February, 2014)
- Oil & Gas UK expresses concerns over bareboat chartering tax measure (European Rigs Newswire - 20 March, 2014)
- Statoil lets Transocean Leader option lapse (European Rigs Newswire - 1 April, 2014)
- Sublets adding further market pressure (North Sea Rig Report - 10 July, 2014)
- Rosneft awards contracts to NADL and Northern Offshore (European Rigs Newswire - 30 July, 2014)
18
© 2014 IHS
Jackup rig market will also soften as little new work is
emerging for 2015-2016
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
19
-3
-2
-1
0
1
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3
4
5
6
7
8
30
35
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45
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55
Jan
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Jun
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Aug
Sep
Oct
No
v
De
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Jan
Feb
Ma
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Ma
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Aug
Sep
Oct
No
v
De
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Jan
Feb
Ma
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Ma
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Jun
Jul
Aug
Sep
Oct
No
v
De
c
2014 2015 2016
Rig
su
rplu
s
Rig
su
pp
ly/
dem
an
d
NW Europe jackups supply and demand 2014-16
Demand Total supply Marketed supply Marketed surplus
© 2014 IHS
Floater market softening
Standard
• Marketed utilisation 85%
• Total utilisation 60%
• 25% cold-stacked
• Fixture rates USD 180,000-300,000
• Older rigs up for sale – few buyers
Deepwater (DW)
• Marketed utilisation 87%
• Total utilisation of 83%
• Fixture rates USD 200,000-400,000
• Declining rig values
• Scope for attrition of older deepwater units
Ultra-deepwater (UDW)
• 95% marketed/total utilisation
• 72 units available before late 2015
• Most UDW rigs working way below water depth capacity
• 16 newbuilds available before late 2015
• Soft market expected until 2016
• Day rates slipping from highs of USD 630,000 to USD 375,000
20
WHATEVER HAPPENED TO THE NORTH SEA RIG MARKET? / SEPTEMBER 2014 BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
New supply incoming but little attrition
-5
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5
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0
50
100
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250
300
1995 1999 2003 2007 2011 2015 2019
Additions/ Removals
Supply
Semi supply 1995-2020
Add Del Fleet
21
• 46% of newbuilds uncommitted • 45% of newbuilds uncommitted
• 61 of 75 have wd>7,500ft
-5
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Additions/ removals
Supply
Drillship supply 1995-2020
Add Del Fleet
WHATEVER HAPPENED TO THE NORTH SEA RIG MARKET? / SEPTEMBER 2014 BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
Sharp decline in 3,001-5,000ft backlog
22
0
200
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1,000
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2,000
1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14
Bac
klo
g D
ays
per
rig
Floating Rig Backlog by Rated Depth
>7,500ft
5,001 - 7,500ft
3,001 - 5,000ft
<3,000ft
© 2014 IHS
Rigs on order and under construction are counted. Out of service rigs are not counted.
WHATEVER HAPPENED TO THE NORTH SEA RIG MARKET? / SEPTEMBER 2014 BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
Jackup supply increasing but market remains for older
rigs
Premium (301ft+)
• Total utilisation of 94%
• Marketed utilisation 94%
• Fixture rates USD 150,000-180,000
• Stronger utilisation of higher-spec vs. lower-spec rigs
• Day rate gap between older and newer rigs
• Oversupply looming
300ft IC
• Total utilisation of 86%
• Marketed utilisation of 87%
• Fixture rates USD 98,000-170,000
• Attrition rate for older rigs remains low
• Low-cost contractors being set up
250ft IC
• Total utilisation of 84%
• Marketed utilisation of 87%
• Fixture rates USD 120,000-128,000
• Attrition rate for older rigs remains low
• Low-cost contractors being set up
23
WHATEVER HAPPENED TO THE NORTH SEA RIG MARKET? / SEPTEMBER 2014 BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
Huge increase in jackup fleet
• 144 jackups under
construction
• 88% uncontracted
• Little attrition underway
• Over half being built in
China
24
0
100
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400
500
600
700
800
-20
-10
0
10
20
30
40
50
60
70
1995 1999 2003 2007 2011 2015
Additions/ Attrition
Jackup supply 1995-2015
Jackup - Add Jackup - Del Jackup - Exist
WHATEVER HAPPENED TO THE NORTH SEA RIG MARKET? / SEPTEMBER 2014 BLACK SEA OFFSHORE CONFERENCE/OCT 2014
© 2014 IHS
BLACK SEA OFFSHORE CONFERENCE/OCT 2014
Conclusions • Cost escalation and uncertainty over the
oil price will lead to a reduction in new
field development projects in 2-3 years
• This will affect demand for pipelay,
platform and subsea installation work
• Increasing supply and slower demand
will bring down utilisation rates for heavy
lift and pipelay vessels
• Floating and jackup rig markets will
weaken in the next two years due to
newbuild deliveries and poor demand
• Longer term, the oil price will be
strengthening, as the global economy
recovers, boosting field development
activities
25
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