Equinor awards drilling contracts extensions

Three suppliers to bag $900 million from drilling contracts with Equinor

Norwegian oil and gas giant Equinor has extended existing contracts with three companies for drilling, completion, intervention, plugging, maintenance, and modification services on 19 assets on the Norwegian Continental Shelf (NCS).

Johan Sverdrup field in the North Sea; Credit: Arne Reidar Mortensen/Equinor

Equinor reported on Wednesday that it was exercising options valued at NOK 8 billion (about $900 million) with Archer, KCA Deutag, and Odfjell Drilling. Based on the statement, Equinor’s 19 permanent installations, which are covered by these drilling contracts, are the Grane, Gullfaks A, B & C, Heidrun, Johan Sverdrup, Kvitebjørn, Njord, Oseberg B, C, South & East, Sleipner A, Snorre A & B, Statfjord A, B & C and Visund platforms.

The drilling contracts; Source: Equinor

Erik Gustav Kirkemo, Equinor’s senior vice president for drilling and well operations, remarked: “These contract extensions will help ensure predictability for the parties and safe and efficient well deliveries. Together with our suppliers we want to develop these services further to ensure long-term value creation from our installations.”

The original four-year agreements were signed in 2018 and the options, which have now been exercised cover the same scope of work as previously regulated by contract. The extension is for a period of two years starting from the end of 2022 while the contracts provide jobs for around 2000 people each year.

Mette Halvorsen Ottøy, Equinor’s chief procurement officer, commented: “The contracts and services have been developed in close cooperation with our suppliers over several years and will help ensure common competitiveness and sustainable activity level.”

In a separate statement on Wednesday, Archer confirmed that it had secured a two-year contract extension for platform drilling services as Equinor exercised the first of three two-year extension options, following the original four-year contract, adding NOK 5 billion (over $562 million) in the estimated backlog to the company for 12 of Equinor’s platforms in the North Sea.

Archer says that the extension will start on 1 October 2022 in direct continuation of the current contract, covering all the rigs for which Archer is currently the incumbent contractor. In addition, Odfjell Drilling confirmed the award, adding that the contract includes drilling operations, work-over campaigns, P&A activities and all preventative and corrective maintenance on the installations Heidrun and Johan Sverdrup.

Dag Skindlo, CEO of Archer, explained: “We have over time shown safe and strong operational performance. Archer is dedicated to further develop our OneArcher operating model to provide Equinor with safe, efficient and cost-effective solutions while contributing to both Archer’s and Equinor’s ESG roadmap.”

Commenting on the award, KCA Deutag informed within its latest statement that the new contract was worth $140 million. Under a separate contract with Equinor, the company is responsible for the management, operation and maintenance of the Askepott and Askeladden Category J jack-up rigs.

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Equinor has been busy exercising other contract extensions too. Last week, the firm extended agreements valued at around NOK 11.5 billion (over $1.3 billion) with Norwegian suppliers for maintenance and modification services of all onshore and offshore installations.