Oil & Gas UK Economic Report 2015

July 2015. Movement in jack-up rig day-rates has been less visible so far, as many are yet to be rebooked. These rates are expected to fall significantly once longer-term contracts are renegotiated. It is anticipated that there will be similar deflationary pressure on the cost of subsea equipment; lease rates for floating, production, storage and offloading (FPSO) vessels; and platform installation, all of which are

expected to fall by at least ten per cent over the next two years. While cost deflation helps to improve the economics of investments on the UKCS, the fall in oil price also makes other less expensive basins more attractive to investors, putting further pressure on the UKCS.

Figure 9: North Sea Daily Rig Rates Based on Reported Contract Awards for Mobile Units

500

Semi-Submersible Rigs Jack-Up Rigs

450

400

350

300

250

200

150

100

50

Nominal Rig Rate (Thousand $/Day)

0

Jul-04

Jul-05

Jul-06

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Source: North Sea Reporter

20

ECONOMIC REPORT 2015