Why cost of SOCAR’s new generation floating drilling rig so high?

State Oil Fund of Azerbaijan (SOFAZ) still did not allocate $696.1 million to fund construction of the first 6^th generation of floating semi-submersible drilling rig in Azerbaijan.

SOFAZ reported that total cost of the project is $1,116,700,000. In 2015 SOFAZ allocated $287.6 million for construction of the 6^th generation semi-submersible floating drilling rig.

In 2014 SOFAZ allocated $192.9 million to fund construction of the drilling rig.

Why is cost of construction of the drilling rig so high? SOCAR reported that it is been designed by an individual order (after upgrade the drilling rig could be upgraded to the 7^th generation) and will be used to drill wells on the sea depth of 1000 meters and with a record depth of 12,000 meters.

Azerbaijan Rigs LLC was created to order construction of the 6^th generation drilling rig in Azerbaijan, in which 90% shares are owned by SOFAZ and 10% by SOCAR.

In June 2013 Caspian Drilling Company, SOCAR’s daughter company in charge of offshore drilling, and Singapore Keppel Fels signed the contract to build the 6^th generation drilling rig. Construction is done by Keppel Fels in Baku. The construction must be completed within 41 months.—0-