KUCHING: Offshore support vessels players in the oil and gas (O&G) industry are of the opinion that charter rates may be back on the rise.

RISING RATES: Offshore charter rig rates are on the rise, says ECM Libra.

In a recent research report, ECM Libra Capital Sdn Bhd (ECM Libra) said after many months of languishing below the US$1.80 per brake horsepower (bhp) level, the upcoming eight-vessel tender from Petroliam Nasional Bhd (Petronas) for the support of marginal fields might lead the way for rate increases.

This was the case despite the tenders’ nature of a long-term charter; more than five years. For that matter, ECM Libra said that Tanjung Offshore Bhd (Tanjung Offshore) and Alam Maritim Resources Bhd (Alam Maritim) were in the running for this tender.

Speaking of rates, AmResearch Sdn Bhd (AmResearch) said offshore rig rates were largely higher last month, with US Gulf of Mexico (GOM) jack-up rates surprisingly resilient; up six points to 227.

Nevertheless, ODS-Petrodata still expected jack-up rig charter rates in the US to remain flat amidst weak drilling activities with utilisation rates of only 37 per cent currently against the backdrop of softer natural gas prices and ongoing regulatory issues in the aftermath of the BP oil spill last year.

In contrast to the GOM jack-up rates, the deepwater and European sectors were expected to stage a more robust recovery later this year. The Deepwater Rig Day Rate Index increased from 661 to 724 this month; the highest level since September 2009.

Contracted deepwater fleet utilisation remained robust at 97 per cent and the outlook was positive for owners of these rigs despite the ongoing uncertainty of the GOM rig market.

On another note, the Northwest Europe Standard Jackup Day RateIndex advanced slightly to 323 with an unchanged fleet utilisation at 76 per cent. ODS-Petrodata was forecasting a rise in jack-up demand in the region in the second quarter of this year as new drilling activities were rolled out.

The only segment which showed a decline was the Mid-Water Depth Semi-submersible Day Rate Index, which eased slightly to 774 with fleet utilisation, unchanged over the past three months at 75 per cent.

Closer to home, ECM Libra said Petronas were in talks with Thailand’s PTTEP to increase gas exploration in the Thailand joint development area (JDA).

Currently, Petronas obtains some 10 per cent of its feed gas from Thailand. In addition, it said that its oil business in Sudan would not be affected after the people of southern Sudan, where the oil fields were sited, voted for independent last month.

On the contracts front, Dayang Enterprise Holdings Bhd (Dayang) finally announced the award of a topside maintenance contract umbrella contract worth RM802 million and spanning into 2016. The job covered Peninsular Malaysia, Sabah as well as Sarawak and it was a ‘call-up’ contract.

This meant that Dayang would be engaged on an ad-hoc basis when their services were needed.

AmResearch also mentioned that jack-up rigs might return to prominence with the development programme for 27 marginal fields in Malaysia. This would require mobile offshore production units; usually converted from a jack-up.

Also, last week, US Bureau of Energy Management head, Michael Bromwich said that there was no significant backlog of deepwater permit applications as operators could be reviewing the impact of new safety regulations.

The offshore drilling regulator said there were only five deepwater drilling permit applications currently awaiting government approval and he expected at least one to be approved before the third quarter of this year.

While these new safety regulations would continue to delay US drilling operations, national oil companies in Europe, the Middle East and Southeast Asia were still carrying out their development activities with renewed vigour after the global financial crisis caused a severe disruption in 2009.

Both research houses named SapuraCrest Petroleum Bhd as their top pick for the sector.