Offshore oil and gas markets continued to strengthen in the past year, with the Clarksons offshore index rising to multi-year highs.
The cross-segment rate index which tracks rig, OSV, and subsea dayrates rose by a further 27% in 2023 to a multi-year high of 106 points. For comparison, it hit 45 in 2017, 114 in 2008, and 101 in 2013. Clarksons believes that the index will reach all-time highs in 2024.
The data and intelligence firm noted the supportive project investment environment, with $116bn of capex for offshore oil and gas projects reaching FID in the past year. This is up 49% on the 10-year trend and Clarksons is projecting $125bn for 2024.
Furthermore, offshore production reached 25.5m bpd of oil, up 3.0% year-over-year, which equates to 27% of global oil output. Also, 129bn cfd of gas were produced, a 1.9% hike year-over-year, resulting in 32% of global gas supply.
Rig, OSV, and subsea markets remain very strong, with rates now higher than 2014 levels in most sectors and regions with activity particularly robust in the Middle East, Brazilian, and West Africa sectors. Supply constraints continue, with limited newbuilding orders with just a handful of orders and ageing fleet dynamics.
As for rig markets, Clarksons said that it strengthened further in 2023 with demand growing by an additional 4% with jack-ups rising by 2% and floaters by 11% to stand at 540 units – jack-ups 395, floaters 145. This is a rise of 20% or 91 units – jack-ups by 56, and floaters by 35 – since the first quarter of 2021. With supply constrained, the end of 2023 was still 24% below 2014 and overall rig utilisation firmed to a strong 88% with the same percentage of jack-ups being utilised while floaters saw 90% utilisation.
Clarksons also stated that rig rates continued to strengthen with floater rates surpassing $500,000 per day mark in the fourth quarter, while high-spec jack-up awards of over $160,000 per day are becoming common while claiming that the jack-up and floater newbuild orderbook has fallen to 16 and 19 units, respectively.
The half-a-million mark being passed in 2023 was predicted by Westwood mid-year. It noted that such a number would go for sixth-generation harsh environment semisubs due to its utilisation being at 100% for the first time in nearly a decade. In late October, the same intelligence firm predicted an increased number of lengthy rig deals as marketed utilisation of sixth to eighth-generation drillships hit 97% while the global utilisation of premium, high-specification jack-ups was around 95% at the time.
As for the OSV sector, the intelligence firm noted another firm year. Demand growth continued, with the number of active units – AHTS larger than 4,000 bhp and PSVs larger than 1,000 dwt – rising to 2,452 by the end of 2023, up 26% since 2020. OSV utilisation firmed at 73%, while PSV utilisation peaked at 78% in the last quarter of the year.
Clarksons OSV rate index rose by a further 30% to stand at 180 points at the end of 2023, a 15-year high and, given the short orderbook – 79 boats, 2% of the fleet – and the increased time and cost intensity of reactivating long-term lay-ups, previous market peaks are in sight. For example, in 2008 the index stood at 199.
Subsea also had another strong year with the Clarksons MSV rate index firmed to a seasonal peak of 104 points, a 10-year high.
The final segment analysed by Clarksons was the mobile offshore production unit segment. Last year saw further steady progress with 11 awards of $6.5bn while 2024 will see a further step-up in activity with 17 awards currently projected, including eight FPSOs and six FLNGs.
