OFFSHORE TECHNOLOGIES & MARKETS
The Stena DrillMAX drillship is one of two Stena Drilling rigs working in the Guyana/Suriname Basin , one of the most notable
hotspots in the offshore sector .

to add additional bidders to their approved list of rig contractors.

That response, as much as anything, is indicative of the operators’
thoughts on the market. When you see them inviting new bidders
to tender, then you know that the market’s improving – rig supply
is decreasing, so they’re looking to expand the pool from which
they’re choosing .”
Deepwater exploration
Operators have also established what Mr Reinertsen termed
a “new baseline oil price” for triggering investment that is lower
than what it had been prior to the downturn. A key enabling fac-
tor for this has been the cost reductions that the service sector
undertook in the wake of the 2020 downturn. The lower baseline
price means that the threshold needed to make brownfield and
greenfield deepwater projects profitable is also lower.

For deepwater, better economics are then leading more opera-
tors to move forward with FIDs on major projects. Mr Reinertsen
said he expects the oil price to remain at a more stable level for the
foreseeable future, which should encourage increased long-term
investment in deepwater.

“To get that market balance, we need to see a healthy oil price
over a long period of time,” he said. “Ultimately, our concern is,
how do we grow great profitability within the offshore drilling
sector? As a company, we believe that creating long-term rela-
tionships with major operators, working with them and adapting
to uncertainty can help remove some of the obstacles you face.”
One approach is to adjust contract terms. While the convention-
al dayrate contracting model days are not over , he thinks incor-
porating KPI-based incentives and market-based adjustment
systems within contracting terms could help drilling contractors
and operators hedge against pricing uncertainty.

“With (Stena) being a privately held independent drilling
contractor, we can obviously afford ourselves some flexibility in
coming up with commercial solutions, and we have proposed
several different models where we could integrate on services or
take over some services that would traditionally fall under the
remit of the operator. While I think the most likely solution going
forward is the dayrate model, we’re going to continue offering
integrated bolt-on services tailored to each client,” Mr Reinertsen
said. To help advance these goals, Stena Drilling has also worked in
the area of smart contracts. Last October, the company announced
a partnership with blockchain technology startup company
SmartChainServices . The companies are working on a smart
contract solution that automates the payment cycle, as well as
new contractual models based on KPIs such as drilling speed,
carbon intensity and fuel usage, all of which can be automatically
validated .

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