Egypt Oil and Gas offers its readers an overview of the Egypt Rig Market Report 2007 that has recently been issued by the company.
The Egyptian rig market is considered to be the largest in North Africa. A highly complicated market that is marked with great potential but is also disturbed by a general unrest towards a low pricing strategy in comparison with its neighbors, the Egyptian rig market is a complicated issue within the oil and gas industry in the country.
This report is an analysis of the rig market in Egypt. It begins by generally outlining the market and its activities. A classification of the rigs in the market then ensues, whereby contractors and operators are discussed in detail and examined in terms of their explorative and productive pursuits. Companies are assessed using their respective market shares and their areas of operation.
This leads to the daily rig rates and the problems of the Egyptian pricing strategy. One of the main problems found in the Egyptian rig market is its pricing strategy. According to some contractors, rig prices in Egypt are 30-35% less than surrounding areas. To comprehend the pricing strategy of the market one must keep in mind that, as contradictory as it might sound, pricing does not always amount to money.
With the aide of surveys and numerical categorization from within the industry, an assessment of the market develops in order to review the recent rig agreement with China and to ascertain its role in the market. The report asserts that the new agreement with China will partially solve the problem of rising demand of rigs. And as a short term solution it seems to be apt, but for the long term, the introduction of 20 rigs by the year 2010 does not do much for a market which has just had more than 200 new discoveries. For the short term, this agreement seems to work on several levels. It provides much needed rigs, strengthens relations with a new and powerful ally, and boosts investment in a country trying to develop in hopes of catching up with advanced economies.
The report includes a section which gauges future expectations of the market based on the aspirations of its major players and the performance of their companies. Using a survey that was sent to all the contractors and operators in Egypt, an analysis is undertaken whereby the Egyptian rig market is assessed based on the performance and problems of companies and not just the statistics of the government. The surveys are divided into the operator survey and the contractor survey, although as is seen some issues traverse both contractors and operators such as pricing and lack of rigs.
The report concludes with stern words of advisement for both the public and private sector when it comes to the rig market. Among the recommendations given is that the Egyptian pricing strategy must adapt to international pricing. A comprehensive, cohesive, and uncomplicated pricing strategy must be implemented. International contractors must rest assured that if they were to invest in Egypt that they will be duly compensated for their rigs.