By Kelly Gilblom
NAIROBI, April 4 A worldwide rig shortage is
delaying oil drilling in east Africa, which is slowing growth
and pushing up costs in one of the industry's hottest new
exploration areas, industry players and officials said.
Companies exploring for oil and gas reserves in east Africa
said they have had to queue up to secure a rig and pay top
dollar when those rigs are procured.
Last week British firm Tullow Oil Plc and its
partner Africa Oil Corp. announced they had discovered
oil in Kenya for the first time, while additional quantities of
gas deposits have been discovered in neighbouring Tanzania and
Discoveries in east Africa and other new exploration areas
have made demand particularly tight, said Terry Bonno, vice
president of marketing at the world's largest offshore drilling
"The availability of ultra-deepwater rigs for 2012 is very
constrained," Bonno said in a recent statement, emailed to
Reuters in response to questions.
The wait for a rig can last more than a year, and the rental
price per day is often close to $500,000, according to analysts.
"Limited availability ... is pushing rates up quickly, as
evidenced by a few fixtures for short-term programmes above the
$600,000 a day level," said Bonno, whose company has one ship
off the coast of Mozambique.
The average price for offshore rigs that drill deeper than
4,000 metres is about $450,000 per day, data firm RigZone says.
Bonno said the shortage has been caused in part by a
drilling boom and a slowdown in production of new drillships as
a result of the economic recession in late 2008.
This year the industry plans to build more than 50 new rigs,
but Bonno expected the problem would persist for some time and
would continue to push up the price of contracts.
While rig shortages are global and have existed for many
years, the outlook tends to be worse in areas with nascent oil
and gas exploration, such as east Africa.
"Demand for deepwater rigs has gone up for use in east
Africa ... there is definitely more international interest in
the region," Marne Beukes, an analyst who studies sub-Saharan
Africa for global data firm IHS, said.
"In the long-term it could get more difficult to secure a
Among other complications associated with getting rigs in
new areas, fewer rigs are under contract in the vicinity, which
means that ships must travel longer, lesser known routes to
reach new exploration projects.
Kenya's energy ministry said companies will need as many as
half a dozen rigs in the coming year. Other east African
countries also have busy drilling schedules; Tullow has said it
plans to drill as many as 20 wells in Uganda next year.
Frank Patterson, Anadarko Petroleum Corp.'s vice
president of international exploration, was quoted by Petroleum
Africa in March as saying the company's drilling plans off the
coast of Kenya were likely to begin in late 2012 or early 2013,
"dependent on rig availability".
Anadarko has two drillships under contract off the coast of
Mozambique and has to wait until one of the ships has completed
its current work so that it can be moved north.