Samsung Heavy Industries (SHI) has made inroads into the world’s large-scale jack-up rig market which is emerging as the shipbuilders’ new revenue source these days.
SHI announced on June 12 that it signed a contract with Norway’s Statoil to construct two large scale jack-up rig units for offshore drilling in the North Sea. The contract value is known as about US$ 1.3 billion (about 1,464.4 billion won). The contract includes an option of two more units, which represents the possibility of winning an additional order of two units.
Jack-up rig is an offshore drilling facility used to develop oil fields on continental shelves. It moves down the elevator-style metal column from the main deck into the deep sea, fixes it to the ocean floor, and buoys up the main deck over the sea surface to begin operation. It can effectively avoid the influence of waves and tides, so it is often used in shallow but rough waters.
Most of the existing jack-up rig units around the world are small and medium scale facilities that can only operate at a depth of 100 meters or lower below the sea level. The world’s small and medium scale jack-up rig market is dominated by Chinese and Singaporean shipbuilders that have long experience and price competitiveness.
However, under the contract with the Norwegian oil company, SHI will construct two large scale jack-up rig units that can explore 10 kilometers beneath the ocean floor at a maximum water depth of 150 meters. They will have highly-advanced specifications so that they can endure extreme winter temperatures of minus 20 degrees or lower and rough water conditions in the North Sea.
Large scale jack-up right units are traded at an average price of US$ 650 million, nearly tripled that of small and medium scale ones and even more expensive than drill ships (avg. US$ 500 ~600 million).
In the meantime, this is SHI’s first successful bid for jack-up rig. It is said that Statoil valued SHI’s unchallenged competitiveness in the drill ship sector and successful experience in the construction of various kinds of ships and marine facilities in the North Sea region.
A source from SHI said, “The large scale jack-up rig market is emerging as the shipbuilders’ new revenue source. We predict there will be worldwide demand for 2~3 large scale jack-up rig units per year until 2020. Beginning from this contract, we will try our best to lead the global market.”
An industry source said, “Jack-up rig is a fixed-type marine facility in the shallow seas. I expect Korean companies will receive more orders because there is sufficient demand for replacement of the existing old ones.”