World's rig industry reeling from cancellations and global slow down

A weaker global demand for energy has forced cancellations that are hitting the world’s profitable oil rig industry.

Production is now slowing and exploration budgets have been cut back in recent weeks as the economy worsens and builders have reported a slow uptake on new orders coupled with cancellations and the renegotiation of contracts. "We are forecasting a slowdown in the new rig-building orders in 2009 followed by a recovery in 2010 as sector fundamentals reassert themselves," Swiss banking giant Credit Suisse said. It also stated that Macquarie Research said some oil drillers were deferring new orders in anticipation that prices of oil rigs would drop even lower as the demand for raw materials used in making structures tapered off.

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