① A number of stone service companies operating in the Middle East have been notified that some of their drilling platforms will be suspended for a maximum period of 12 months; ② the Arab drilling company directly named Saudi Aramco in the announcement, saying that it is discussing with Aramco to suspend the operation of 3 platforms; ③ Industry insiders estimate that at least 18 drilling platforms have been affected.
Financial Services Association, April 6 (Editor Qi Ling) Recently, quite a few drilling platform companies have claimed that customers in the Middle East region have requested that their offshore drilling platforms suspend operations. Over time, the fleet of drilling platform companies involved in decommissioning continues to expand.
On the evening of April 3rd$CHINA OILFIELD (02883.HK)$An announcement was issued saying that recently, the company suddenly received a notice from a Middle Eastern customer to suspend the operation of four drilling platforms. The company is discussing with the customer the specific suspension of execution time, follow-up arrangements and corresponding solutions. During the suspension period, the company will simultaneously actively seek suitable market opportunities.
After Hong Kong stock trading resumed on April 5 (Friday), CNOOC Oilfield Services fell sharply. The biggest drop reached 24.4%. The closing report of HK$8.28 on the same day was HK$8.28, down 16.11%, and the volume increased more than four times that of the previous trading day.
However, CNOOC Oilfield Services did not specify the name of its customer or the reason for the suspension of operations.
Suspended drilling platforms continue to expand
Since Thursday of this week, more rigs have recently announced the suspension of operations at some of their drilling rigs in the Middle East region. Judging from the announcement, the employers behind these drilling service platforms have all pointed to Saudi Aramco.
Dual listing on the Oslo and New York Stock Exchange in Norway$Borr Drilling (BORR.US)$According to the announcement, it has received requests from customers to suspend operations on the “Arabia I” jack-up drilling platform operating in Saudi Arabia. It is expected that the platform will be suspended for up to 12 months from the second quarter.
Although the company did not name its customers, the “Arabia I” platform has signed a commercial contract with Saudi Aramco since October 2022, and the service was originally scheduled to end in October 2025.
Arabian Drilling (Arabian Drilling), which is listed on the Saudi Tadawul Stock Exchange, said in an announcement that it is discussing a contract with Saudi Aramco to suspend three drilling platforms. Like Borr, the suspension period is up to 12 months.
Shelf Drilling in the UAE also said it has received a notice from a “Middle Eastern customer” to suspend operation of four drilling platforms. Although it has not indicated that Saudi Aramco is the “Middle East customer” mentioned above, Saudi Aramco is their only Middle Eastern customer that employs four or more jack-up rigs.
Saudi Arabia-based ADES Holdings also announced that it has agreed with “Saudi Arabian customers” to temporarily suspend the operation of 5 of the 33 offshore jack-up drilling platforms it operates in the country for a maximum period of 12 months.
Similarly, the name of the customer was not revealed in the ADES announcement, but this is easy to deduce because all 33 jack-up rigs working in Saudi Arabia have signed drilling service contracts with Saudi Aramco.
Valaris, the world's largest offshore drilling platform company, announced on April 4 that its joint venture in Saudi Arabia was notified by Saudi Aramco that VALARIS 143, one of the 19 drilling platforms it operates locally, will suspend operations for up to 12 months.
Some industry insiders said that at least 18 drilling platforms have been affected by Saudi Aramco's current operation adjustments, and Saudi Aramco may continue to optimize and adjust its drilling platforms in the future.
Why is Saudi Aramco requesting the suspension of operations
Although none of the company's announcements clearly mentioned the reason why their customers requested that the drilling platform be suspended, in connection with Saudi Aramco's previous official announcement, the reason behind this adjustment is already clear.
Saudi Aramco said at the end of January that its maximum production capacity would remain at 12 million b/d instead of increasing to 13 million b/d as originally planned. It explained that the current production expansion plan was put on hold and that the decision was only made at the request of the Saudi Ministry of Energy.
In March 2020, the Saudi Ministry of Energy requested Saudi Aramco to increase production capacity to 13 million b/d by 2027. Since then, Saudi Aramco has invested billions of dollars to expand production.
Saudi Arabia's current production capacity limit is 12 million b/d, but actual production is about 9 million barrels per day. Earlier, Saudi Arabia announced multiple rounds of production cuts to support international oil prices.
Some industry insiders pointed out that with production expansion plans being put on hold, Saudi Aramco's original drilling service contract and operation volume will have to be adjusted. Since there are quite a few drilling service platform companies that serve them, Aramco will choose some of their rigs to suspend operations.