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Labuan to gain from stacking rigs, vessels - Part 1
Though oil prices have inched up to about US$66 (RM235.62) per barrel, they are still 17.5pc below the US$80 per barrel deemed a reasonable level at which Petroliam Nasional Bhd (Petronas) may resume drilling contract awards, especially for marginal fields.
Until then, rigs off contracts and offshore support vessels (OSVs) are making their way to the stacking grounds.
There are 29 O&G companies listed on Bursa Malaysia and many more that are related to the industry. The depressed oil prices have shaved off on average 46pc from stock prices since June last year. The industry is now facing lower corporate earnings and possible loss of jobs due to Petronas’ move to cut capital expenditure and production.
Popular stacking grounds in the region include Johor waters, the Bay of Brunei in Labuan and Batam Island in Indonesia. Sources say the number of stacked rigs and vessels in these locations has more than doubled since the turn of the year, and is steadily rising.
Market observers have warned that from 26 rigs operating in Malaysia today, a rapid decline to 10 can be expected by year-end.
With contracts few and far between, rig owners are feeling the pinchi, and forced to crunch the numbers to decide the fate of their fleets.
Rigs and vessels without a contract can be kept in an active state or ready-stacked. In this state, regular maintenance is carried out by a crew and the vessel is ready to embark on a contract, for example, in anticipation of a spot contract. Spot contracts are lucrative, high-margin contracts. Thus, it is the norm for 0&G players to idle a vessel or two in anticipants of such deals.
Most O&G players treat their stacked vessels like a closely-guarded secret. In Malaysia, rig owners include Bumi Armada and Yinson, with its fleet of Floating, Production, Storage and Offloading (FPSO) units. Others include MISC Bhd, Perisai Petroleum Teknologi Bhd, Gryphon Energy and UMW Oil and Gas Corp Bhd. Global players SapuraKencana Petroleum Bhd and Bumi Armada have a more diversified fleet operating in international markets.
Several rigs and vessels of local players are being stacked at Johor Port and Labuan, according to sources. Checks on Rigzone and Marinetraffic reveal Bumi Armada has several OSVs and a tug stacked in Labuan, while SapuraKencana has several tender rigs stacked.
The source also reveals MISC has FSO Cendor stacked in Johor waters awaiting a contract, while MOPU Dua is believed to be stacked in Sarawak waters.
It has been reported that six of UMW’s jack-up rigs are seeking new charter contracts this year, with its eighth jack-up, Naga 8, scheduled for delivery later this year. The Naga 2 is believed to be undergoing routine dry docking at Malaysia Marine and Heavy Engineering’s yard following Vietnam’s Hoang Long JOC’s move to shorten its contract. Naga 3 was released last month and UMW is seeking further work for both units in Vietnam.
Perisai Petroleum said two weeks back it was exploring the possibility of deferring taking delivery of its second jack-up rig, pending its securing of a rig contract with a shipyard. Its new-build jack-up drilling rig, Perisai Pacific 101, began operations last August.
Labuan to gain from stacking rigs, vessels - Part 2
Ian Craven, director of Icarus Consultants, an O&G marketing and contracting services company, said multi-purpose drilling vessel Norshore Atlantic, which recently completed a top-hole drilling programme for Shell Malaysia in the Malikai field, is believed to be heading to the stacking grounds.
Talisman Malaysia Ltd has issued a termination notice to Seadrill jack-up West Vigilant, on farm-out to Shell; it will return to Talisman before being released this month. Meanwhile, Craven says Shell Malaysia will release the Ensco 105 jack-up rig next month and CPOC will release the Ensco 106 in August.
Craven also reveals the Perisai 101, leased to Petronas Carigali Sdn Bhd (PCSB), is being offered on a farm-out to Hess and SapuraKencana Energy, both of whom have drilling programmes scheduled to start this year.
“PCSB is also trying to farm out the Maersk Convincer, on a contract until November which will run out of work by September. PCSB may decide to terminate the rig’s work and pay the termination fee if it cannot farm the rig out,” he says.
Most of the rigs stacked in Malaysian waters belong to international players such as Diamond Offshore, Maersk, Transocean, Noble and Ensco. Craven says the drop in oil prices has triggered a wave of rig and support vessel cold-stacking, likely to lead to the scrapping of old rigs. Given Malaysia’s fleet is young, he doubts the local market will see any scrapping activity.
Diamond Offshore and Ensco have both recently cold-stacked floaters in Labuan, according to Craven. “Over the past three months, three floaters were stacked, bringing a total of nine rigs cold stacked around the region. There were six other rigs cold-stacked in Labuan which are now to be scrapped,” he adds.
He also notes there are 24 rigs in a warm-or hot-stacked state, without contracts. He believes the number could double by year-end if no new work materialises and some of these will also be cold-stacked.
“Hercules has 11 jack-ups cold-stacked and we are likely to see more of this as rigs roll off contracts during the year, with prospects for follow-on charters receding by the day. Paragon, for example, has only three rigs cold-stacked today but has 22 rigs becoming available this year,” Craven warns, adding most of these rigs should be scrapped, not cold-stacked.
Craven, who has been in the O&G industry for about four decades, says since 2012, the 91 new jack-ups that entered the market were absorbed, with contracts readily available. However in December, for the first time two jack-ups delivered were left idle with no available immediate contracts. He believes this trend will continue this year, especially in the second half.
He adds the market is set to receive 120 new-build jack-ups scheduled for delivery between now and early 2017, of which 52 are speculative and for sale. With about 200 new rigs scheduled for delivery in the next six years, adding to the rising count of stacked rigs, the glut will affect revenue as the day-rate rig owners are able to command drops. Those with older fleets may need to consider scrapping rigs to keep revenue streams at profitable levels.
Labuan to gain from stacking rigs, vessels - Part 3
As of April, Baker Hughes Inc. one of the world’s largest oilfield services companies, reports a 50pc decline in the number of rigs drilling for O&G in the US since the industry’s high in October last year of 1,609 rigs.
Early last month, only 802 rigs were actively drilling. Historically, this should translate to a lower production.
However, due to the shale-oil boom, US production is expected to hit 9.5 million barrels per day this month, up from nine million barrels last November.
Nevertheless, experts claim the bulk of the oil production is from newer rigs built in the last two years that can support production despite lower oil prices. As wells dry up, production is expected to decline in Q3 and this could fuel a rebound in oil prices.
While the slowdown in the O&G industry has hit most players, a new others, especially those in shipcare services, are having a field day. Johor Port Bhd said it is embarking on an expansion of its Offshore, Inspection, Maintenance & Repair (OIMR) centre to cater for the growing demand for cold and warm-stacking.
Johor Port reveals the plan is to create more berthing space in the existing OIMR area. As a multi-purpose port, the expansion will also cater for the rising growth in bulk and break-bulk cargoes.
Johor Port says its capacity for stacking is 60pc, with six drill rigs cold-stacked within port limits. Several OSVs are also cold-stacked in its waters.
“For rigs, cold-stacking depends largely on the draft, the type of rig; for example, if it is jack-up or semi-submersible, as this involves anchor patters that take up more space,” it explains.
The port also notes there are several others rigs warm-stacked, with owners carrying out periodic survey and maintenance jobs as well as replenishments; in addition, some are in route to mobilisation or demobilisation.
A Labuan source says the number of stacked rigs rose to 13 in April, from a previous count of just three. These comprise jack-ups, semi-submersibles and drillships, some of which are owned by local players. The total number of vessels stacked in Labuan Port has doubled to 58, most related to the offshore O&G industry.
He explains at least 80pc of the rigs are hot-stacked, awaiting contracts. He believes several have bagged contracts and will soon move out but the short-term nature of the contracts will see these rigs and vessels back in Labuan waters before long. However, given the state of the O&G industry, he does not foresee most of the hot-stacked rigs moving out any time soon.
The source says depending on services required, rig owners who stack their rigs in Labuan could fork out anything from US$6,000 to US$30,000 per month for maintenance and stacking.
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May 13 2015, 12:15 PM, updated 10y ago
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but you have maximum salary 
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. take it easy for a few days.
.but about the fee, wow debomm..huhu 
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