JDC inaugurates Hakuryu 12 jackup, looks to growth in Middle East, Myanmar and Russia

By Astrid Wynne, Contributing Editor

The Japanese word “hakuryu” means “white dragon.” In Asia, dragons are strongly associated with oceans. They also represent power and blessings, Yuichiro Ichikawa, President and Representative Director of Japan Drilling Company (JDC), said at the rig-naming ceremony for the HAKURYU-12 jackup, held on 23 January at the PPL shipyard in Singapore. The rig’s first contract will be offshore Suriname and Guyana as part of a rig-sharing contract between Teikoku Oil (Suriname) Co, a subsidiary of Japanese oil company Inpex, and Canada-based CGX Energy. However, the longer-term target for JDC is elsewhere.

“Our focus is the Middle East, especially Saudi Arabia and Abu Dhabi. The market is huge. Now that the oil price has dropped, almost all the Southeast Asia oil companies have stopped exploration projects. But in the Middle East, they have not,” Mr Ichikawa said.

JDC’s 10-year joint venture with Qatar Petroleum in Gulf Drilling International ended in 2014. This leaves JDC free to market its rigs in the Middle East. Subsidiary Japan Drilling Saudi Arabia Company was formed in September 2014.

Another area of focus is Gazprom’s Sakhalin III field, where JDC is looking into a possible long-term contract for the HAKURYU-5 semi starting in summer 2016; operational months are expected to be June to October. JDC is also discussing contracts for work in Myanmar. Local content laws in Myanmar can be challenging, however – 25% in the first two years, 50% in the second two years and 75% in the third two years. Mr Ichikawa said he does not see these requirements as insurmountable, though. “We already drilled a well in Myanmar using local workers on the Naga 1, and four years ago with Hakuryu-5,” he said.

JDC also has ambitious plans for fleet growth. Within a decade from 2014, the company aims to almost double its number of rigs from the current eight. By the end of 2016, the company will already have two additional jackups. By 2023, it aims to have an increase of two to three deepwater floaters – potentially a mix of two semis and one drillship– plus the possible addition of one more high-spec jackup that is not yet on order. A large component of this growth is economic partnership, according to JDC.

The latest addition to the company’s fleet, HAKURYU-12, is owned by Maple Maritime, a subsidiary of a Japanese lease company, and operated by JDC. The contractor has entered into a similar arrangement for the HAKURYU-14 Pacific Class 400 jackup, due out of PPL in October 2016, and the Keppel FELS B Class HAKURYU-15 jackup, slated for delivery in December 2016. Mr Ichikawa said the company is looking for partnerships for floater expansion, as well. Financial support from the Japanese government may be considered to facilitate the expansion.

“The Japan government would like to have a variety of energy sources, not only from the Middle East but also Mexico, Canada, Australia or the Mediterranean,” Mr Ichikawa explained. “I am looking into the possibility of utilizing the Japanese government fund, but there are many conditions. One condition is the shipyard. A Japanese shipyard should participate actively, if not wholly.”

JDC is aiming to prepare a project for the construction of its semisubmersibles by the end of 2016, although the time frame could be affected by the movement of oil prices. However, Mr Ichikawa said he remains bullish on the long-term prospects for the oil industry. He said he hopes to see a recovery to $60-plus/bbl within six months, with a rig market recovery six months later.