Iraqi drilling offsets fall in regional rig count
Drilling in Iraq compensates for drop in Syrian and Yemeni activity
Despite political uncertainty throughout the Middle East, the region’s overall rig count over the last twelve months has remained relatively stable.
According to Baker Hughes’ most recent, monthly rig count for September, 2013, the region has only lost two rigs in the last twelve months, but gained 15 rigs in the last month.
The region’s rig count can be sensitive to the trends afflicting the oil and gas industry, but for the most part, any significant changes to the rig count have remained localised. The conflict in Syria has been followed by a complete halt in drilling activity in the country and there have been no new rigs in Syria since January of this year. The country had as many as 31 rigs in January of 2011.
“The situation in Syria for the oil and gas business has really slowed down, phenomenally, and exploration of course,” said Stewart Williams, principal analyst for Middle East at Wood Mackenzie, at a press conference held in Dubai. The same can also be said for Yemen, where the rig count has been stagnated between 3-and-6 throughout the last ten months.
“What is the real surprise is the amount of drilling that used to occur in Yemen, it was a phenomenal place to explore, and of course with the troubles in Yemen, this has really tailed off very quickly, and last year we didn’t see any exploration wells drilled in Yemen,” said Williams.
And while political instability in select countries has certainly marred investor confidence and tied the hands of exploration companies, other countries have actually seen a growth in activity.
At the forefront of the region’s growing rig markets is Iraq, with a twelve month high of 93 rigs, up 31 over a six month period starting April 2013. Drilling demand in the country has been primarily spurred on by activity in Kurdistan where lucrative exploration and production contracts, alongside high exploration success rates have contributed greatly to rig builder confidence.
Saudi Arabia has also maintained a strong- 80 rig count for September. With domestic energy demand expected to continue growing in the region, NOC’s in the region will look to hold on to the rigs they have as long as possible.
“Rig rates have actually gone up substantially, particularly offshore rig rates,” said Williams. “A couple of weeks ago ARAMCO renewed a couple of contracts it had for around $80,000 a day day-rates for $120,000 a day day-rates. So it’s a 50% rise for the same rigs.”