War and Covid underpin offshore recovery

Russia’s invasion of Ukraine and post-Covid demand recovery were key factors underpinning a sharp recovery in offshore oil and gas markets in 2022. Data released recently from Clarkson Research reveals that the analyst’s Offshore day rate Index, which covers rigs, offshore support and subsea vessels, rose 32 points to a post-2014 high of 84. The index hit 100 nine years ago but fell to just 45 in 2017.

Strong oil prices were an important driver. Brent averaged USD 99 per barrel over the year as offshore oil became an important constituent in the quest for greater energy security. Meanwhile, national oil companies accelerated offshore final investment decisions, boosting capital expenditure commitments to USD 102 billion, up 15% year on year.

There was record investment in mobile offshore production units, Clarkson has revealed. Fourteen awards totalling USD 16 billion included ten FPSO projects. There were also nine production unit redeployments of which eight were FPSOs.

The offshore rig market tightened significantly in 2022 as demand growth of 11% supported a seven-point increase in utilisation. By the end of the year, jack-up utilisation was 87% and floaters 84%. However, Clarkson predicts even higher utilisation rates in the future, climbing to 93%.

Jack-up units, particularly in the Middle East, have performed well. Rig demand there surged by 25% to an all-time high of 144 rigs. Rates reflected this development, with a 79% increase across the Middle East jack-up market over the year. Global jack-up demand climbed to 392 units by the year end. This compared with 458 in 2014 and 300 in 2017.

Demand for offshore support vessels strengthened by 7%, according to Clarkson data, with utilisation reaching 70% by the end of the year. Day rates for these vessels firmed by 29% to 138 points but still lagged the 2014 peak by 18%. The term market for large platform supply vessels in the North Sea ended the year up by 74% at GBP 16,000 a day.

Subsea support vessel rates also rose over most of the year before easing back in the last quarter owing to seasonal factors. However, typical rates for a multipurpose support ship with two work-class remotely operated vehicles still strengthened by 46% over the year, according to Clarkson’s figures.    


Article Editorial staff Ship&Offshore
Article Editorial staff Ship&Offshore