Offshore oil rig rates lifted by pandemic recovery, race to replace Russian crude

Conflict in Ukraine has helped push up demand for rigs as the United States, Europe and other allies look for alternatives to Russian oil and gas supplies

Rental rates for offshore oil and gas rigs have rocketed higher, boosted by a race to lift production because of the war in Ukraine and a recovery in demand after the COVID-19 pandemic, Qazet.az reports.

Drilling companies are in a stronger position to demand higher dayrates for their equipment after several lean years that led to a wave of mergers and pushed them to scrap older rigs, leaving fewer available now that demand is rebounding.

Daily costs to hire a rig, known as the dayrate, have risen fastest for deepwater equipment in the "Golden Triangle" from the U.S. Gulf of Mexico to offshore West Africa and Brazil.

"Rates are picking up quite rapidly, especially in West Africa," said Cinnamon Edralin, head of rig market analysis at Oslo-based Esgian. "Last year, we were at $200,000, this year we are firmly in the $300,000s and quickly heading to $400,000."