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ECONOMIC REPORT 2015
20
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.
0
50
100
150
200
250
300
350
400
450
500
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Nominal Rig Rate (Thousand $/Day)
Semi-Submersible Rigs
Jack-Up Rigs
Source: North Sea Reporter
Figure 9: North Sea Daily Rig Rates Based on Reported Contract Awards for Mobile Units