OSLO: An unusually high number of rigs are competing for a Det Norske Oljeselskap ASA drilling contract in the North Sea, an illustration of how companies are desperate for business as producers slash spending amid a crude-price slump.
“I’ve tendered for rigs on the Norwegian continental shelf many times, and I’ve never seen a tender with 13 rigs competing for the job,” Det Norske Chief Executive Officer Karl Johnny Hersvik said in an interview Wednesday. “That’s a pretty extraordinary figure.”
Thanks to the fierce competition among drillers starved of contracts, Det Norske expects to pay “extremely favorable” rental rates and get “very flexible” terms for the 300-day contract for a semi-submersible rig that it’s seeking for the Alvheim oil field, Hersvik said.
Offshores drillers such as Transocean Ltd., Seadrill Ltd. and Fred Olsen Energy ASA have been caught in a double whammy of falling demand for their services and a glut of new rigs coming into the market. In Norway, Statoil ASA, the dominant state-controlled oil company, has cut the equivalent of four years of drilling by terminating and suspending rig contracts over the past 18 months, adding to the oversupply.
