Offshore Drillers See No New Rigs Even as Demand Nears Peak

As the world’s biggest offshore drillers gear up for more than $500 billion in new investments in the coming years, don’t expect rig contractors to meet the boom with a new round of vessel building.

Second-quarter earnings calls from the biggest offshore drillers over the past week revealed little enthusiasm to build costly new rigs that take years to roll out. Instead, the rig owners will maintain tight global supplies in order to push day rates higher.

The number of rigs drilling for oil and natural gas offshore has climbed 50% since the depths of the Covid-19 pandemic in late 2020. More than $500 billion in final investment decisions are expected between now and 2025, with more than $200 billion of that going to deepwater, according to SLB, the biggest oil-services provider.

A new rig can cost as much as $850 million to build,