|
Reuters News
English (c) 2006 Reuters Limited
SINGAPORE, June 21 (Reuters) - The rise in demand for offshore oil rigs is sustainable for the next several years as crude prices are unlikely to fall below $50 a barrel any time soon, a senior official at Singapore's PPL Shipyard said on Wednesday.
PPL is among the 12 yards around the world owned by SembCorp Marine , the world's second-largest offshore oil drilling rigs builder behind local rival Keppel Corp. which has a network of 17 yards worldwide.
Together the two firms are making about 60 percent of all new offshore rigs and have built about 70 percent of all rigs since 2004 when rising oil prices
surged past the $50 a barrel mark on their way to record highs and sparked a boom in demand for offshore oil drilling equipment.
Ong Tian Khiam, managing director of PPL said oil producing countries like Saudi Arabia were unlikely to boost production to ease prices as that had hurt them in the past.
"The Saudis have learnt the lesson, they are not going to help bring prices down by increasing production," Ong told a seminar in Singapore. "I believe the chances of oil prices going below $50 are very slim."
Ong said about 77 percent of the current global fleet of jack up rigs -- the three-legged rigs that stand on the ocean floor in water depths of up to 500 feet (152.4 metres) -- by 2012 would be older than 30 years, which is considered as the end of their commercial life.
"So there is a strong replacement cycle also kicking in," he said.
Ong said the current boom in rig construction was also not as euphoric as the boom that started in the late 1970s only to end in a collapse in demand for these rigs by the mid-1980s.
He said roughly 300 rigs were made between 1978-1985, twice the number made in the previous 14 years.
Only 11 jack up rigs and three semi-submersible rigs -- that float on water of up to 10,000 feet -- have been delivered since 2004, while another 54 jack ups and 21 semi-submersibles are on order or under construction at the moment.
Ong said both the Singapore yard operators, SembCorp Marine and Keppel Corp., were likely to maintain their global leadership in rig building due to their technological capabilities, time-tested relationships with drilling contractors and reputation in the market for on-time and in-budget delivery.
"A possible threat from Chinese yards does exist. But China's cost advantage diminishes as major drilling companies see Chinese yards' poor transparency and safety systems as a greater risk," Ong said.
|
Keppel to expand suite of solutions for Offshore Wind Farm Installations