After the conflict between Russia and Ukraine, the price of a barrel of oil reached US$ 100, raising the discussion about the impact that this increase would have on offshore platforms

With the rise in the price of a barrel of oil, issues such as the impact on demand for offshore platforms began to be discussed. This discussion occurs because offshore platforms, unlike onshore platforms, involve more extensive planning, such as obtaining licenses, checking platform availability, bidding, among others. Consequently, most offshore platform contractors expect a short-term increase in demand for platforms.

However, exploration and production companies are making short to medium term plans at prices of a barrel of oil at US$ 80, a value well above what has been seen in the market for years. Thus, the expectation is that the high demand for rigs, which was in progress since last year, will continue to increase.

The high demand for offshore platforms with the increase in the price of barrel of market oil improved the use of drillships in the US GoM and South America, as well as jackups in the Middle East.

Regions likely to leverage in response to energy security concerns

The region that tops this list are countries operating in the North Sea/Barents region. This area has had many oil wells drilled in recent years. The expectation is that near-field opportunities will be found, in addition to accelerating the development of some projects, so that exploration and production companies assist in the energy security of several countries and benefit from the current pricing environment.

According to Esgian Rig Analytics, eight oil well drilling campaigns with expected start dates up to 2024 are in the pre-bid or tender process for the North Sea region, while another 26 programs are still in planning, but can proceed to bidding.

In addition, there is a suggestion that some projects already presented may be revised according to the criterion of increasing the focus on energy security. Like the Cambo project in West Shetland, UK. At the end of last year, Shell decided not to go ahead with the project, but sources indicate that the decision is currently being reviewed.

According to esgian, due to the large North Sea market, countries close to it may look to West Africa for their energy needs, which would lead to an increase in drilling activity for oil in the region that had a slow recovery after the downturn of 2014. Namibia is a country being watched, following TotalEnergies' announcement of a “significant discovery of light oil with associated gas” at its Venus prospect in February.

In addition to Namibia, Australia is another country that may see an increase in demand for platforms offshore with the increase in the price of a barrel of oil. Australia accounts for most of the demand for rigs on the continent. In total, there are more than 115 years of global work rig being tendered with projected starts until the year 2024.

However, not all works will be awarded as planned. Some projects may be canceled or delayed due to increased fees, lack of adequate platform availability, changing focus of many exploration and production companies and lack of funding. Despite this, the expectation is that due to the increase in the price of a barrel of oil, there will be an increase in the demand for offshore platforms in the short to medium term with the recognition of exploration and production companies and governments about the importance of hydrocarbons in the energy transition and their need for energy security.