Six offshore drilling companies – Valaris, Borr Drilling, Shelf Drilling, ADES Holding, COSL, and Arabian Drilling – have received notices of suspension for the shared total of 18 drilling rigs, all believed to have come from Saudi state-owned oil giant Aramco.
The latest in the line of temporary contract suspensions for their drilling rigs are COSL, Arabian Drilling, and ADES.
COSL, short for China Oilfield Services Limited, received a sudden notice from the customer in the Middle East to suspend the operation of four drilling rigs, and entered negotiations with the customer about the specific time for suspension, follow-up arrangement and corresponding solution.
During the suspension period, COSL said it will proactively seek for suitable market opportunities in a simultaneous manner, adding that ‘the suspension will have certain impact on the original business expectation of the company in the Middle East, and the specific impact is still under further evaluation.”
ADES Holding also informed about ‘mutual agreement’ with its client in Saudi Arabia to temporarily suspend operations on five from its 33 offshore jack-ups operating in the Kingdom for a period of up to 12 months
The company said that one of the suspended rigs will be deployed to its recently awarded campaign in Thailand that is slated to start operations in the second half of 2024, while a second rig is poised for another imminent opportunity in the region.
According to ADES Holding, the suspension mechanism offers enough flexibility for the suspended rigs to complete the firm and optional terms of new deployments before resuming work in Saudi Arabia post suspension. The company added that the original term of the suspended contracts will automatically be extended for a period equal to the suspension for each rig, preserving the remaining backlog for the respective contracts.
COSL and ADES Holding did not name the Middle Eastern client, same like Shelf Drilling, which received a notice of suspension of operations of four jack-up rigs, but according to various sources, the contract suspensions were issued to companies by Aramco.
Arabian Drilling, one of the largest national onshore and offshore drilling contractors in Saudi Arabia, also announced that it is currently in discussions regarding contract suspension for three of its offshore rigs with the client confirmed to be Aramco.
The suspensions for the three rigs are for a period of up to 12 months. The impacted rigs and the timing of the suspensions remain yet to be confirmed by the company.
Considering that the offshore drilling company Valaris, through its joint venture ARO Drilling, received a notice of suspension from Aramco for its VALARIS 143 jack-up rig, with similar suspension issued by Aramco for Borr Drilling’s jack-up rig Arabia I, this brings the total of rig contract suspension to 18 so far.
The move follows Aramco’s cutback of planned maximum sustainable oil production capacity to 12 million barrels a day (bpd), from 13 million bpd almost four years ago, ordered by Saudi Arabia earlier in 2024.