A sluggish, gradual restoration for world land rig demand is predicted following the COVID-19 induced downturn in 2020, in line with an evaluation from Westwood World Vitality Group, the specialist power market analysis and consultancy agency
The evaluation has additional revealed that the demand is estimated to return to pre-pandemic (2019) ranges by 2025.
As drilling exercise plummeted throughout the globe over the course of 2020, operational rigs are estimated to have fallen round 25%, contracting from round 4,570 to round 3,530. Utilisation ranges adopted go well with falling to an estimated roughly 40%, much like the downturn ranges of 2016.
Whereas a restoration is anticipated year-on-year over the forecast interval, it’s anticipated to be gradual and characterised by operator warning as they navigate a number of necessary concerns – tempo of world demand restoration, the power transition and geopolitics.
There may also be important regional variances to take care of. International locations with E&P landscapes dominated by NOCs are anticipated to steer restoration.
Ben Wilby, senior analyst at Westwood, mentioned, “The worldwide market is predicted to stay considerably oversupplied all through the forecast interval. China is anticipated to steer rig demand, whereas robust development is predicted within the GCC. Nevertheless, each Latin and North America skilled important demand contractions in 2020, and should not anticipated to recuperate to 2019 ranges, notably in North America, over the forecast interval.”
Nevertheless, the evaluation additionally highlights areas of potential upside to Westwood’s Base Case forecast. Momentum within the growth of unconventional reserves in China, Argentina and Colombia may end in stronger than forecasted rig demand. Equally, further demand may come from the sanctioning of initiatives which have seen lengthy delays up to now, together with large-scale developments in Australia. Sustained ranges of upper commodity pricing and demand restoration may additionally encourage US onshore operators to extend the rig rely and drilling of latest wells.