From the North Sea (NT): Statoil has taken further steps to cut the cost of its chartered rig fleet, extending suspensions on three of four semis recently taken out of action.

Worst hit is COSL Pioneer, which has been laid off until August 2015, while the services of Scarabeo 5 and Songa Trym will not be wanted until February. A fourth semi, Transocean Spitsbergen, remains suspended until year-end, but is then due for a port visit.

Earlier in the year Statoil terminated its contract with the semi Ocean Vanguard, which is now stacked. Even so, the company still has 14 rigs active on the Norwegian continental shelf. On the international front, last month it cancelled its contract - with two years to run - on the drillship Stena Carron working in the Angolan sector.

Statoil faces different conditions from when it signed up so many rigs. At that time the challenge was to ensure sufficient rig capacity, a company official pointed out. Now drilling is facing lower margins, high costs, and lower profitability, the official said.

It has also endured below-par success this year including a succession of dry and non commercial holes in the Barents Sea and two disappointing wells in Angola’s Kwanza basin. At home or abroad, greater success would probably have spawned more follow-up drilling, keeping the fleet better employed.

As it is, there are substantial costs still to be borne. Laid-off rigs go onto reduced dayrates, and cancelled contracts trigger a penalty. In the case of Stena Carron, Statoil put the cost of terminating the rig and services at $350mn.

The full effect of the collapse in the oil price and budget cuts has yet to hit the rig market. In the North Sea, rig utilisation remains high with one source reporting 100% for jackups and 89% for semis during November.

Beside Ocean Vanguard, only two units are stacked or idle. The warning signs are there, though, with few new North Sea fixtures coming and many rigs due off contract next year with no further work arranged.

Adding to the downward pressure on dayrates are newbuildings - about 200 units, of which more than half are jackups. Even bullish Seadrill, which believes rig market difficulties will be short-lived, has decided to suspend its newbuilding programme for an indefinite period. It has 16 rigs under construction.

Offshore