KUALA LUMPUR, Feb 7 — AmBank Research sees rig markets in the North Sea and Southeast Asia returning to pre-pandemic levels of rig demand this year, while Africa still has much to catch up.

The research house said these regions have been on the road to recovery since 2021 after hitting rock bottom at the close of 2020.

Drilling demand in North America, South America, and the Middle East has remained strong since 2019 and exited 2021 in good shape while South America is in even better shape, it noted.

Citing Westwood Global Energy Group’s Global Offshore Rig Market Report, it said offshore investment bounced back in 2021 and recovered to pre-pandemic levels, which augurs well for the offshore drilling industry.

“Engineering, procurement and construction (EPC) spend surged 200 per cent year-on-year (y-o-y) to US$41.7 billion (US$1=RM4.19) in 2021, with the last quarter recording US$8 billion.

“The energy consultant projected that 2022 could accelerate further by 68 per cent y-o-y to US$70 billion, the highest since 2013, with annual EPC spend from 2022 — 2025 averaging at US$57 billion annually,” it said, referring to the Westwood report.

At home, the sector’s contract awards in the last quarter of 2021 to Malaysian oil and gas operators rebounded 3.5 times year-on-year (y-o-y) to RM5.3 billion, largely from a lumpy Pemex onshore contract award to a Coastal Contracts joint venture.

Even so, major fabricators, still suffering from low margins and balance sheet constraints, did not secure significant EPC jobs, it noted.

On oil price, the research house said it is maintaining 2022 — 2032 projections at US$70 — 75 per barrel for now with Brent crude to rise over US$90 per barrel on receding worries that the Omicron variant pandemic could significantly dampen global demand.

“Our price projection is in line with the US Energy Information Administration’s short-term energy outlook of US$75 per barrel for 2022 and US$68 per barrel for 2023,” it added. “Notwithstanding high global vaccination rates, we are cautious on the emergence of new vaccine-resistant viral variants, the possibility of Iranian crude re-entering global markets, a rebound in US shale production and further relaxation of Opec production quotas.’’  — Bernama