While Saudi Arabia’s curtailment of its oil production expansion took the market by surprise earlier this year — followed by a spate of jack-up contract suspensions — an executive for a leading OSV owner sees continued strong demand in the Middle East.

OSV owners are seeing “a better market than we have seen for a long time and…the Middle East is the locomotive driving oil and gas,” P&O Maritime Logistics chief executive, Martin Helweg, told Riviera. Mr Helweg sees investment in gas development continuing to underpin offshore activity in the region.

He initially was concerned when the news broke about Saudi Aramco’s suspension of contracts for 22 jack-ups, which had a knock-on effect, impacting almost 40 offshore support vessels, including some of P&O Maritime’s.

Mr Helweg feared it could lead to a more systematic downturn in the market. “But,” he added, “that has not been the case.”

P&O Maritime Logistics (P&O ML) has not seen any similar pullback in Qatar, Abu Dhabi or in the rest of the region following Saudi Aramco’s production adjustment, said Mr Helweg, noting that the state-owned oil major “is pressing forward, just not as fast.”

Recent market reports by energy analysts and brokers confirm Mr Helweg’s assessment. Singapore-based brokerage firm UOB Kay Hian maintains a “bullish view” on the Middle East, despite the recent jack-up suspensions by Aramco. The Singapore broker says “day rates and utilisation rates appear to be holding up well” in the region. “[Prior to the suspensions], the jack-up segment has been one of the better performers this year, with day rates and utilisation rates up 11% and 15% yoy respectively,” pointed out UOB Kay Hian.

Market analysts MSI reported US$50Bn in offshore projects were awarded in H1 2024 in the Middle East Gulf, and expects if current trends continue, the region will surpass spending in 2022 and 2023.

Aramco is maintaining its current production capacity of 12M barrels of oil per day (bopd), following the cancellation of the Safaniya and Manifa offshore projects. The state-owned energy major is shifting its focus to develop more natural gas resources.

At the end of June, the Kingdom handed out a whopping US$25Bn in contracts for its Jafurah II and Master Gas System III projects, increasing its unconventional (shale) gas production.

In July, Abu Dhabi-based ADNOC Offshore awarded a US$733M contract to ADNOC Drilling for three island drilling rigs in support of the growing operations at the offshore Zakum field. ADNOC Drilling chief executive, Abdulrahman Abdulla Al Selari, said new island rigs would “be the most advanced in the world, embracing artificial intelligence, the most transformative technology of our generation.” The rigs, which will be constructed by China’s Honghua Group, will be delivered for the start of operations in 2026.

The Upper Zakum Oilfield has an estimated 50Bn barrels of oil reserves.

Meanwhile, QatarEnergy is undertaking a major drilling campaign to expand gas production from its North Field, underpinning its plan to increase LNG liquefaction capacity by 85% by 2030.

As of 1 July, rig utilisation levels in the Middle East Gulf were a healthy 85%, with 130 jack-up and mobile offshore drilling units (MODUs) active, and just 23 in layup, according to data from VesselsValue.

Similarly, 1,108 OSVs and 309 offshore construction vessels (OCVs) were operating, yielding active fleet utilisations of 86% and 88%, respectively.