Energy consultancy Westwood is predicting a healthy 25% demand growth for land rigs in the GCC region from 2023-2027, as Saudi Arabia and the UAE pump billions into reaching production capacity targets
This is according to the first edition of Westwood’s MENA Onshore Drilling Rig Market Forecast, which shows that the Middle East and North Africa (MENA) region currently hosts a fleet of 1,159 identified land drilling rigs. With 526 units (45% of the MENA fleet), the Gulf Cooperation Council (GCC) leads supply, while North Africa and Other Middle East contain 27% and 28% respectively. The largest fleets are hosted by Saudi Arabia, Algeria and Kuwait, while Iraq and Iran also host fleets of over 100 units.
Two of the key markets for high HP units, Saudi Arabia and the UAE, are dominated by their respective NOCs – Saudi Aramco through its JV with Nabors, SANAD, and ADNOC via its subsidiary ADNOC Drilling. In terms of international contractors, Sinopec hosts the largest fleet of the international players with 80 land drilling rigs, 44 of which are located in Kuwait. KCA Deutag’s acquisition of Saipem’s onshore drilling fleet has taken its MENA fleet from 45 to 77 units.
Westwood anticipates that the GCC will continue to grow strongly throughout the five-year forecast, with demand in 2027 expected to be 53% higher than 2019. This will be driven by production capacity increases at all major onshore producers, with many of the projects required already having passed FID. In comparison, a -12% change in demand in the Other Middle East region and an 8% increase in North Africa are forecast over the same period.
Kuwait and Saudi Arabia have announced major rig fleet increases to cope with the level of demand they are expecting. Westwood predicts rig supply to grow by 11% over the 2023-2027 forecast period to meet demand, most notably in the GCC where the rig fleet is expected to increase by 20%.
Utilisation across MENA is forecast to average 39% in 2023, increasing to 42% by 2027. However, rates in the GCC are significantly higher, with utilisation forecast at 70% in 2023 increasing to 78% by 2027. In the North Africa and Other Middle East areas, Westwood expects Algeria and Iraq to lead the way in utilisation rates with Algeria increasing from 47% to 60% and Iraq from 37% to 46% over the next five years. While significantly below the GCC powerhouses, there is significant upside potential to both. Algeria is emerging as a new hotspot for gas exportation to Europe, and Iraq meanwhile continues to set ambitious production targets, which will require a major increase in utilisation of its fleet.
For more information on how to access the first edition of Westwood’s MENA Onshore Drilling Rig Market Forecast, click here or contact
