Saudi Arabia Idles Offshore Rigs Amid Demand Slump

Following the demand and oil price crashes, Saudi Arabia has idled offshore rigs and postponed the start of a US$18-billion expansion project, Bloomberg News reported on Wednesday, citing sources familiar with the plans.

In early May, offshore drilling contractor Noble Corporation plc said that its jackup rig Noble Scott Marks, located offshore Saudi Arabia, will be suspended at the request of its client for up to one year, beginning in the first half of May. The contract suspension was expected to enter into force after the jackup rig completes the well it was drilling at the time. Noble Corporation has the right to market the rig in pursuit of other work opportunities in the region, it said.   

Then earlier this week, Shelf Drilling said that it had received a notification from its customer on the suspension of operations for the High Island IV jack-up rig for up to 12 months. The offshore rig is contracted to Saudi oil giant Aramco, which declined to comment for Bloomberg the status of the rigs and projects.

According to Bloomberg sources, Saudi Aramco is also suspending the project for expansion of the offshore Marjan and Berri oilfields for a period of between six and twelve months.

Last year in July, Saudi Aramco awarded 34 contracts worth a total of US$18 billion to boost the oil production capacity of the two fields by 550,000 bpd in order to sustain its 12-million-bpd production capacity by the early 2020s.

Saudi Arabia’s oil giant plans to increase the production capacity of the offshore Marjan and Berri fields by 550,000 bpd and by 2.5 billion standard cubic feet a day (bscfd) of gas. 

Under the plans to raise production capacity at the two fields, Saudi Arabia aims to have production at the offshore Marjan field increase by 300,000 bpd of Arabian Medium Crude Oil, while output at the offshore Berri field will rise by 250,000 bpd of Arabian Light Crude—for a total of 550,000 bpd increase in oil production capacity that is set to replace production capacity lost from aging oilfields.  

By Tsvetana Paraskova for Oilprice.com

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