Demand strong for drilling rigs

Dubai: Demand for drilling rigs is likely to remain strong over the coming years as energy companies search for more sources of oil and gas.

The Middle East and North Africa (Mena) region needs at least 12 to 15 new offshore drilling rigs within two years, according to Jerry Smith, managing director of rig-maker Maritime Industrial Services Company (MIS) in Sharjah.

He said about 100 offshore rigs are operating in the region currently but many of them have aged and should be replaced with new ones.

"There is a lot of growth in this business. We see a shortage of rigs," Smith told Gulf News.

Since the company started manufacturing rigs at its yard in Sharjah in 2006, it has received seven orders with a combined value of $1 billion.

Its latest contract is worth $400 million and comes from Bahrain-based MENAdrill, an oil and gas drilling services company launched by First Energy Bank this year.

The demand for rigs is coming from stepped up global exploration activity amid high crude oil prices, which make search for energy resources in difficult places more viable.

Esam Janahi, chairman of First Energy Bank, said "slots for new rig construction are very rare in today's market" so the company signed the deal with MIS when it got the opportunity for placing an order.

MENAdrill, which will offer its rigs to oil companies in the Middle East, North Africa and South Asia, is expected to order more rigs soon.

It plans to spend $1 billion in the next two to three months. One of the orders will be for a deep-sea drilling vessel.

"There is a pressing need for significant investment in oil drilling equipment in the region. The demand for investment in equipment is only matched by the global market's demand for oil. This investment is a farsighted one, and one that recognises in the long term the demand for production will again be critical," said Mohammad Al Nusuf, another official of First Energy Bank.

MENAdrill aims to have more than 20 rigs operating within three to five years. The company said it is in the process of acquiring a leading drilling company with a number of rigs already working in the region and others under construction.

Its diversified drilling portfolio will include jack up and semi-submersible rigs capable of drilling in shallow, medium and deep water, as well as land rigs. It will also provide project management services.

The Mena region is projected to satisfy an increasing share of the world's energy needs.