Sharjah firm floats groundbreaking rig

A Sharjah oil construction firm put the finishing touches on a specialised shallow-water drilling rig yesterday - a milestone in the emergence of a home-grown oil services sector. The "jack-up" rig, which has extendable legs that are lowered to the sea floor at the drilling site, was built by Maritime Industrial Services (MIS) in their shipyard and will be transported to Venezuela. "This is the first time in the Middle East that a jack-up rig has been completed and built here," said Jerry Smith, the company's managing director. "Ironically, it's going about as far away from Dubai as it can get." Construction of jack-ups in the UAE is the latest stage in diversification from simple sales of crude oil produced by foreigners to sectors that were once the exclusive province of firms based in industrialised countries. The contract to supply two rigs, including the one finished yesterday, to SeaWolf Oilfield Services, based in Nigeria, is worth US$254 million (Dh933m). Jack-ups are used to drill for oil in shallow waters, including offshore fields in the Arabian Gulf, and Mr Smith said the company had a backlog of orders from firms in the region. Companies in Sharjah, Dubai and Abu Dhabi have assembled larger semi-submersible rigs for several years and refurbished older equipment, but construction of jack-ups is still dominated by firms in Singapore and the US. A boom in demand for drilling rigs worldwide encouraged MIS to enter the shallow-water rig construction market two years ago, Mr Smith said. MIS was accompanied by a sister firm, Gulf Marine Services, which builds and operates jack-ups and barges from its base in Mussafah. Until recently, firms in the region lacked the expertise and financing to compete with more established players, Mr Smith said. The struggle to complete the rig for SeaWolf illustrated those challenges. "The task has not been easy and completion has been somewhat delayed due to the many challenges and stumbling blocks," Mr Smith said. "We are pleased to confirm that this steep learning curve and the experience gained on those two first rigs is already delivering results with our third rig." The test for MIS, he said, would come when the current boom slowed, which he predicted would not happen for several years. "When a downturn comes in the future, we hope we're in a position to be competitive with the US and Singapore." Mr Smith said MIS had a bright future despite the credit crunch and the falling price of oil. The company had lined up credit some time ago and the slowing economy had an added bonus, he said: a drop in the price of steel. The company has six more orders to complete in the next two years and a total "backlog of about $1 billion". The most recent order came from MENAdrill, a newly formed oil services company based in Bahrain. "The basic fundamentals supporting drilling are still very strong," Mr Smith said. "The basic demand for oil is still there, and we're still using more than we're finding." Jack-ups have the added advantage of being cheaper than larger, deep-water rigs. "Even oil at $30, $40, or $50 a barrel pays out one of these rigs on a short-term basis," he said. cstanton@thenational.ae