“Exciting tenders” are underway in the UK market, which Odfjell Drilling (OSLO: ODL) is keeping an eye on despite wider concern about the sector.
“All I can say is that we would like them… if we have rigs available, that is the question,” says CEO Kjetil Gjersdal of the Aberdeen-headquartered/ Oslo-listed firm.
Speaking after Odfjell released its 2022 results, Gjersdal said: “Our fleet is Tier 1, big rigs, big capacity. And when you talk UK West of Shetland, typically you look at rigs that you will find in our fleet.
“You’ve got the (Diamond Offshore) Ocean GreatWhite starting up now for BP. There’s a couple of exciting tenders out now – Equinor’s got Rosebank.
“I’m sure that job will go to one of those Tier 1 rigs (in the market). And I also hope that there’s a couple of other tenders coming up.”
Rosebank – Equinor’s huge field in the region – is gaining momentum as it heads for production in 2026.
And the Ocean GreatWhite is now on its way to BP’s Schiehallion field to drill more wells.
UK market concern
But this comes amid a backdrop of concern for North Sea Drillers; the International Association of Drilling Contractors (IADC), which Odfjell is part of, said earlier this month that a lack of activity is risking an exodus of rigs from the UK North Sea.
A look at Odfjell’s fleet status shows that rings true.
Despite being Aberdeen-headquartered, Odfjell has no rigs in action in the UK, preferring areas like West Africa, Canada, or its true home market of Norway.
That’s partly due to harsh environments like the West of Shetland being more suited to its “Tier 1” high-specification vessels, says Gjersdal, while other parts of the UK generally require lower-spec rigs.
“The rest of the UK, the tendency to go for the kind of lower spec rigs that you typically won’t find in in our fleet. So clients for those smaller kind of jobs, which are not West of Shetland, seem to take a lot of capacity on, I would say, mid to lower spec rigs.”
That isn’t all bad for Odfjell though, as lower-spec rigs being used in the UK will remove capacity from the market and keep drilling firms healthy – in a far cry from the dire straits the sector, as a whole, was in during Covid.
The firm also pointed to the ongoing UK licensing round: “everything helps just to get this overall activity level”.
In its annual report published Thursday, Odfjell notes increased demand for its Tier 1 harsh environment rigs in the West of Shetland in 2024 and 2025 – still paling, however, in comparison to Norway.
The question, as Gjersdal put it, is whether Odfjell will have rigs available as other newer, more prospective and, in many cases, more fiscally stable regions snap up units.
Aberdeen HQ – how about a rig in Aberdeen?
Gjersdal says the UK remains “an important market” for the company, adding “the Rosebank project we are familiar with, and these are exciting jobs of high interest to us and we follow them very closely”.
And Aberdeen just got its first rig – a jackup – into its new £400m deepwater port. Would Odfjell consider docking there if it won one of these West of Shetland contracts? “Yeah,” Gjersdal concisely replies.
Even though Odfjell isn’t currently active in the UK, its headquarters of Aberdeen still suit it well, he adds, pointing to the overall company set up and tax reasons.
“And it works, you know. It also means us that we have a footprint over there should we get another opportunity, which is not unlikely.”