Maersk Drilling, the Maersk subsidiary operating in the drilling rig market, plans to fire 70 employees in Norway as a consequence of the approaching expiration of the current contract for drilling rig Maersk Reacher, says the Norwegian trade union for Maersk employees, MAF, in a statement on its website.

MAF has been in talks with management at Maersk Drilling in relation to the layoffs, which constitute the second major firing round in a short amount of time, as the company let about 150 employees go in the summer of 2015.

Maersk Reacher has been employed by the oil company BP in the Norwegian part of the North Sea since 2011, but in September this contract will expire and no new employment has been secured for the seven-year-old jack-up rig yet.

Maersk Drilling faced the same dilemma last summer with the rigs Maersk Giant and Maersk Guardian. However, the company managed to obtain projects later on for the two rigs in the Danish part of the North Sea for Dong and Maersk Oil respectively. Although the first of these will expire this month.

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The market for leasing drilling rigs has grown significantly weaker in recent years, and as a result, Maersk Drilling has a number of rigs which are facing unemployment over the course of 2016.

"We have been seeing a situation in the oil industry where costs have been increasing for several years and in the middle of 2014 we experienced the extreme decline in the oil price. For this reason the oil companies' earnings and cash flow are under pressure, and they have to slow down field development and exploration," said Michael Harboe-Jørgensen, Head of Strategy at Maersk Drilling, in comments to Ritzau Finans in the summer of 2015.

"This is how the scenario is playing out, and this is also what we will see in the near future, which is why we are reacting as such," he explained in regards to the big round of layoffs at the time.

In the Maersk Drilling fleet, the rig Maersk Convincer, which most recently was employed in Malaysia, has been without a contract since the fall, and the floating rig Maersk Developer became unemployed in the US in January.

Later this year, the aforementioned Maersk Giant and Maersk Reacher as well as Maersk Resolute, Maersk Deliverer and Maersk Venturer will also face unemployment for certain periods of time.

Maersk Drilling began 2016 with a contract coverage of 77 percent out of possible contract days. This was the best in the business according to data from IHS Petrodata and Bloomberg, however still lower than in previous years.

As a consequence, the Maersk subsidiary projects a much lower income this year than the USD 732 million, which were earned in 2015.

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