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Russian driller Eriell optimistic on market prospects as oil and gas prices

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Russian independent oilfield services player Eriell has significantly improved its outlook for drilling demand in the country this year on the back of a rebound in energy prices and an emphasis on gas development projects.

Deputy chairman Vitaly Dokunikhin told Upstream that the company expects a “more positive scenario for the Russian drilling market” for 2021.

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Around four months ago, Dokunikhin told Bloomberg that Russian oil producers could reduce drilling orders by a further 20% this year after cutting them by an estimated one-third in 2020.

Despite those initial gloomy expectations and Eriell’s application for Russian state support to battle the Covid-19 economic downturn, the company only saw a minor reduction in the number of wells drilled and the combined length of wells drilled last year.

Although Russian authorities approved the company’s application to be included on a list of the country’s strategically important players in the second quarter of 2020, Eriell has never used the option to call for any state support, according to Dokunikhin.

The driller is, however, providing regular reports on its health and outlook to the country’s Energy Ministry, he added.

Eriell said that it now expects a slight increase in drilling orders in its core markets in Russia and Uzbekistan this year, with some work to be carried out in Iraq that was postponed last year after winning a tender from Malaysia’s Petronas to spud 23 development wells on the Garraf field.

In Russia, Eriell’s core customers are state-controlled gas giant Gazprom and oil producer Gazprom Neft, with drilling jobs mainly ordered by their subsidiaries and joint ventures in West Siberia.

Other key customers are subsidiaries of country’s largest independent gas producer Novatek, including the Yamal LNG and Arctic LNG 2 projects, according to Eriell.

Dokunikhin said that the current contracted drilling portfolio in Russia for this year consists of about 200 complex deviated and horizontal wells, mostly in gas and condensate fields.

In Uzbekistan, the company expects to spud about 160 less complex wells under an ongoing mid-term governmental programme to reverse the decline in hydrocarbon output.

Besides drilling, Eriell’s scope of responsibility under the Uzbek programme includes the overhaul of existing old wells, fracking and the construction of in-field flow lines and connecting pipelines.



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