Offshore Rig Recovery Slows Down in 2025 and Concerns Market, Says Westwood

Written by Sara Aquino

Published on 27/04/2025 at 10:36

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Despite The Challenges, Westwood Believes In A Recovery In 2026, When The Demand For Offshore Rigs Should Resume Its Growth.

After years of gradual recovery, the global offshore rig market faces a scenario of significant slowdown in 2025. According to the consultancy Westwood Energy, the combination of lower demand and increased supply of units has directly impacted rig utilization, leading the sector into a new phase of challenges. The marketed utilization rate fell to 88% in March, the lowest level since the resumption began in 2021.

Market Pressure: More Supply And Delayed Projects

The increase in new rigs available and the postponement of deepwater drilling projects have been putting pressure on the market.

In addition, the suspension of more than 30 contracts for jack-up rigs by Saudi Aramco, with deadlines of up to a year, has intensified the downturn.

ARTICLE CONTINUES BELOW

Fleet Begins To Be Decommissioned: Nine Rigs Will Be Retired

In light of the new reality, operators are opting to reduce their fleets. By March, nine rigs have already had their removal confirmed.

Among them, four jack-up rigs controlled by Shelf Drilling, White Fleet Drilling, and Well Services Petroleum, as well as three semisubmersibles from the 8500 series, owned by Valaris — all relatively young, with less than 15 years of operation.

The movement has also affected the drillship segment, with Noble announcing the sale of two modern S12000 drillships inherited from Pacific Drilling. One of these vessels never even began drilling a well, despite being only 10 years old.

Critical Situation For Offshore Rigs

The number of units in cold stack (prolongedly deactivated) is growing rapidly. In the jack-up sector, there are already 39 units out of operation and another 19 maintained in warm stack (quick reactivation condition).

Among the drillships, there are five units in cold stack, all aged between 14 and 16 years, and seven in warm or hot stack conditions, four of which have Special Periodic Inspection (SPS) expired or close to expiration by 2026.

Many of these inactive offshore rigs are located in Southeast Asia and the Mediterranean, controlled by companies such as Transocean, Seadrill, Stena, Vantage, and Saipem, reflecting the concentration of idle assets in already saturated markets.

Semisubmersibles Have Few Options For Decommissioning, But Risks Persist

Unlike the other segments, the semisubmersible fleet has undergone a drastic reduction over the past decade, shrinking by 59% since 2015. Currently, only two units are in cold stack and three in warm stack, a small number, but still relevant to the market.

However, two of these units are in the Caspian Sea — a region with logistical limitations for equipment replacement — decreasing the likelihood of immediate removal.

Other units are positioned in Las Palmas, the North Sea, and Canada, under the management of companies such as Dolphin Drilling, Well-Safe, and Transocean.

Possible Recovery From 2026

With the expectation of new merger and acquisition movements in the offshore market, analysts point out that the current process of trimming down may, in the future, create a more solid foundation for the sector’s recovery.

“In summary, due to the decline in demand and utilization of jackups, drillships, and semisubmersibles this year, it is likely that more units will be moved to cold stack, as they do not have guaranteed subsequent work commitments. These factors are believed to accelerate the removal of old, idle, and surplus assets from the fleet, which, in the long term, may help pave the way for a more solid recovery in utilization from the second half of 2026, when Westwood forecasts a resurgence in demand,” assessed Teresa Wilkie, director of RigLogix at Westwood.

In the meantime, the offshore rig sector will need to navigate still turbulent waters, dealing with oversupply, a need for modernization, and strategic adjustments to survive the new cycle.

Offshore Rig Recovery Slows Down in 2025 and Concerns Market, Says Westwood

Despite The Challenges, Westwood Believes In A Recovery In 2026, When The Demand For Offshore Rigs Should Resume Its Growth.

Market Pressure: More Supply And Delayed Projects

Fleet Begins To Be Decommissioned: Nine Rigs Will Be Retired

Critical Situation For Offshore Rigs

Semisubmersibles Have Few Options For Decommissioning, But Risks Persist

Possible Recovery From 2026

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Offshore Rig Recovery Slows Down in 2025 and Concerns Market, Says Westwood

Despite The Challenges, Westwood Believes In A Recovery In 2026, When The Demand For Offshore Rigs Should Resume Its Growth.

Market Pressure: More Supply And Delayed Projects

Fleet Begins To Be Decommissioned: Nine Rigs Will Be Retired

Critical Situation For Offshore Rigs

Semisubmersibles Have Few Options For Decommissioning, But Risks Persist

Possible Recovery From 2026

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