Business
Rig shortages delaying East Africa oil and gas exploration
Oil rig in Uganda. PHOTO/Tullow Oil
(Reuters) – A worldwide rig shortage is delaying oil drilling in East Africa, which is slowing growth and pushing up costs in one of the industry’s hottest new exploration areas, industry players and officials said.
Companies exploring for oil and gas reserves in East Africa said they have had to queue up to secure a rig and pay top dollar when those rigs are procured.
Last week British firm Tullow Oil Plc., and its partner Africa Oil Corporation, announced they had discovered oil in Kenya for the first time, while additional quantities of gas deposits have been discovered in neighboring Tanzania and nearby Mozambique.
Discoveries in East Africa and other new exploration areas have made demand particularly tight, said Terry Bonno, vice president of marketing at the world’s largest offshore drilling company, Transocean.
“The availability of ultra-deepwater rigs for 2012 is very constrained,” Bonno told Reuters by email.
The wait for a rig can last more than a year, and the rental price per day is often close to US$500,000, according to analysts.
“Limited availability is pushing rates up quickly, as evidenced by a few fixtures for short-term programmes above the US$600,000 a day level,” said Bonno, whose company has one ship off the coast of Mozambique.
