DRILLING OUTLOOK
million barrels, and China wants to reduce
its imports.”
Argentina is also expected to be a bright
spot in the onshore market, in anticipation
of the launch of the country’s new pipeline
in the Vaca Muerta in 2023. Rig count
there has already increased from 38 in
2021 to 87 in 2022, and Westwood expects
that number to hit 113 by 2026. Number of
wells drilled could reach 1,200 by 2026, Mr
Wilby said, adding that these projections
are “bearish” and could go higher if the
pipeline launches on schedule.

Russia, bogged down by its invasion of
Ukraine and geopolitical pressures, has
already seen a notable drop in drilling
activity this year. The number of wells
drilled has dropped by almost 28% in
2022 compared with 2021. This decline is
expected to continue into 2023.

US and Western Europe’s sanctions
on Russian oil and gas have certainly
contributed to this decline, as have the
departure of several operators and major
service companies, all announced this
year. BP cut ties with its 19.75% shares in
Rosneft, while Equinor announced it will
exit its Russian joint ventures, including
the North Komsomolskoye development
project in West Siberia and 12 E&P licenses
in East Siberia.

Shell also ended its involvement in the
Nord Stream 2 pipeline and dropped its 50%
shares in the Gydan and Salym develop-
ment projects. Schlumberger, Halliburton
and Baker Hughes all announced plans
to suspend new investments in Russia
following the invasion. On the drilling
contractor side, KCA Deutag has suspend-
ed new investments and is evaluating
options on its 21 rigs located in Russia.

In the EU, which is facing something
of an energy crisis due to its reliance on
Russian gas, countries are now scram-
bling to find new sources of energy. In
the near term, this is unlikely to lead to a
significant increase in rig count. Mr Wilby
forecasts Western Europe will only have
six onshore rigs in operation next year, the
same as last year. That could change in
the longer term, with the UK government’s
recent decision to end its moratorium on
hydraulic fracturing, as well as news that
Shell may have discovered major shale
reserves in Block 2 and Block 4 in the
southern part of Albania.

However, it is more likely that Europe
will boost its gas imports through pipe-
lines from Africa. In July, the Energy
Ministers of Algeria, Niger and Nigeria
signed a memorandum of understand-
ing to set up a task force for building the
Trans-Saharan Gas Pipeline, which would
deliver natural gas from Nigeria to Spain.

“There’s certainly an appetite we haven’t
seen before, and that’s because Western
Europe is just desperate for natural gas,”
Mr Wilby said. “However, the reaction we
have seen from the region is not one
of increasing domestic drilling activity.

Instead, they are seeking alternative sup-
ply outside of Russia. There is some poten-
tial for some projects in Western Europe,
but whether that will translate into any-
thing, it is hard to say.” DC
DRILLING CONTRACTOR • NOVEMBER/DECEMBER 2022
21