The COVID-19 pandemic has severely affected the market due to the decline in oil prices in 2020 and delays in oil and gas upstream projects in offshore areas. However, the recovery of crude oil prices after the scenario in 2020 is expected to make offshore drilling profitable. This, in turn, may aid in the growth of the market especially in the new exploration done in different offshore regions across the world. In addition to this, factors such as improved viability of deep-water and ultra-deepwater projects are likely to drive the offshore drilling market during the forecast period. However, the volatility in crude oil is expected to remain a major restrain to the growth of the offshore drilling market during the forecast period.



The deep-water and ultra-deepwater segment is expected to witness significant development due to increasing technological innovation and the rising viability of such operations.


New markets, such as Gabon, Senegal, Guyana, Trinidad & Tobago, Egypt, and the Mexican side of the Gulf of Mexico are actively promoting the development of offshore reserves, especially the deepwater and ultra-deepwater reserves. This, in turn, is expected to create significant opportunities for the operating companies in the near future.


Middle-East and Africa is expected to be one of the potential markets with the majority of the demand coming from Nigeria, Angola, and Egypt.



Key Market Trends

Deepwater and Ultra-deepwater Segment to Witness Significant Growth



From 2014 to 2019, global deepwater expenditure has increased and countries/regions, such as Brazil, the United States Gulf of Mexico (GoM), North Sea, Angola, and Nigeria constitute for a large amount of this capital expenditure, respectively, with West Africa anticipated to have the greatest regional growth.


In the southern hemisphere, a new exploration permit was awarded in April 2019 by the Argentine government to the consortium formed by ExxonMobil and Qatar Petroleum, for exploration in Malvinas Oeste Basin. 13 companies offered approximately USD 995 million for exploration licenses of areas within the Austral, Argentina Norte, and Malvinas Oeste basins. All three basins are offshore, combining a total tendered area of more than 200,000 sq. km. never explored before.


In 2019, Argentina’s neighboring country, Brazil held its sixth successful oil and gas bid round in just over a year and awarded all four blocks in the prospective pre-salt area for BRL 6.82 billion. The latest investment and upcoming projects in deep-water are likely to drive the growth of the deep-water drilling market during the forecast period in the South America region.


Moreover, the recent waves of cost reductions and critical technological breakthroughs have enabled many oil and gas exploration and production companies to expand their portfolio of sustainable deep-water developments.


Therefore, with the increase in deep-water activities and the technology breakthrough, the deep-water and ultra-deep water segment is expected to witness a significant growth during the forecast period.



Middle-East and Africa to Witness Significant Growth



Many countries in the Middle-East and Africa region have large-scale offshore reserves of oil and gas. The world’s largest gas field - the South Pars Gas Complex in the Persian Gulf or the new discoveries of oil and gas reserves in the eastern Mediterranean sea are all expected to aid the growth of the market.


The Angolan offshore acreage is among the most prospective plays in Africa and continues to draw high levels of investment. Drilling results are broadly positive, with exploration yielding several high-impact discoveries in recent years.


In January 2020, Eni started production at the Agogo-1 deepwater field and won exploration rights to Block 28 in the Namibe Basin, while Total, active in Angola for more than 60 years, was awarded Block 29.


On the flipside, with Angola’s most prospective acreage in the deepwater, ultra-deepwater, and pre-salt areas, exploration can be characterized as high-risk, high-reward. The bulk of drilling is expected to continue to target deepwater and pre-salt prospects, spearheaded by industry giants, such as Chevron, BP, Eni, Exxon Mobil, Statoil, and Total, along with national oil company Sonangol.


Nigeria holds the top position among the ten countries, with the largest remaining crude oil and condensate deepwater reserves. The majority of reserves are along the country's Niger River Delta and offshore in the Bight of Benin, the Gulf of Guinea, and the Bight of Bonny. As of now, exploration activities are mostly focused on the deep and ultra-deep offshore, although some onshore exploration is also taking place.


Production of oil in the country decreased, by 1.9%, to 33.6 million tonnes, in 2019 from 34.2 million tonnes, in 2018. The consumption of oil in the country decreased, by 1.7%, to 34.7 million tonnes, in 2019 from 35.3 Million tonnes, in 2018. The decrease in production and consumption is expected to restrain the growth of the market.


Therefore, factors such as upcoming offshore E&P activities especially from the West Africa region are expected to boost the number of offshore drilling rigs in the region in the coming years.



Competitive Landscape

The offshore drilling rigs market is moderately fragmented. Some of the major offshore rig manufacturers include Keppel Corporation Limited, Samsung Heavy Industries Co. Ltd, Sembcorp Marine Ltd, Transocean Ltd, and Seadrill Ltd.

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