China Oilfield Services Ltd aims to begin in the third quarter an estimated US$10 million programme to overhaul one of its drilling rigs and extend its operating water depth as part of efforts to capture growth opportunities in deepwater oil drilling.
The dominant supplier of such services in offshore China, a unit of China National Offshore Oil Corp, is in talks with listed oil and gas producer CNOOC to find a window from the latter's drilling schedule to carry out the upgrade.
'Due to strong drilling demand, our rigs' drilling schedule is very tight,' said COSL chief executive Yuan Guangyu in an interview, adding the overhaul would see the operating water depth of one of its three semi-submersible rigs increase from under 500 metres to 1,500 metres.
Tests on the upgrade will be carried out by a 50-50 joint venture between COSL and Norway's Atlantic Deepwater Technology. The venture covers the Asia-Pacific market and owns the intellectual property right to the technology.
While the technology has not been commercially proven elsewhere, Mr Yuan estimated the equipment cost and related expenses to upgrade a rig at US$10 million.
COSL's semi-submersible rigs, which operate in sea depths of 300 to 500 metres, had an average daily rental rate of US$118,483 last year, up 107.5 per cent from 2005.