The Australia and New Zealand region is an active offshore drilling area and there are currently 15 or 16 rigs off Australia and New Zealand, up from only five three years ago, Kellock said.

But this is still only 2-3% of the global offshore rig fleet and local operators don't get the economies of scale available elsewhere as there are fewer sublet opportunities.

In addition, rig contractors around the world now had many options open to them when choosing where to locate their equipment as industry operators continued to gain confidence that oil prices would stay above $US50 a barrel.

"Operators in Australia have to contract rigs at enormous expense and bring them from elsewhere," he said.

"But if the rigs that are now here can be kept in Australia and New Zealand, this may take care of demand over the next couple of years."

Rig share arrangements in Australia and New Zealand make a lot of sense for both contractors and operators, according to Kellock.

Although there are many rigs now under construction, demand is forcing exploration and production companies to sign contracts years in advance of the work itself.

According to ODS Petrodata's figures, 164 rigs are now under construction around the world. Of these, 82 are jack-ups, 32 are drillships and 44 are semi-submersibles, while six are in other categories.

The good news for Australian operators is that 75% of these are being built in Asia and many are not under contract. Seventy-five per cent of jack-ups being built, 20% of semi-submersibles and 50% of drillships are not yet under contract, but operators seeking rigs should get in quickly as all of these rigs will be needed.

"Operators have nothing to gain by waiting," Kellock said.

The jack-up market would probably be in balance, according to Kellock, but there would be a shortage of floaters (drillships and semi-submersibles).

"It will either be a very tight market or we will see a lot more construction of floaters," he said.

It was unlikely that any old rigs would be retired - indeed there would be process of "reverse attrition" in which retired and damaged rigs were put back together and reconditioned.

Kellock claimed that one jack-up rig now operating had been built in 1958.

"It was officially built in 1982, but that was actually a rebuild," he said. "It's still operating and it's doing fine."

Rates were likely to remain high with Australian rig rates staying in the top half of world rig rates, and rates being even higher in New Zealand.

However, jack-up rig rates were likely to remain near current levels and operators were likely to have a little more choice, allowing them to use rigs appropriate to their needs.

"There will be an increasing trend for rates to match work specs rather than rig specs," Kellock said.

"Operators will not be forced to pay top dollar for a top rig doing everyday kinds of work."

This would not necessarily be true of floaters, he warned.

"Floater rates are expected to rise further," Kellock said.

"There will be an ongoing shortage of rigs. The fleet will be overspecced by and large, especially in water depth capabilities, and will be capable of doing anything thrown at it. But numbers will be a problem."

However rates would be capped by new-build rig costs - if they went too high, big companies would simply choose to have their own rigs built.

Kellock estimated that nowadays jack-ups cost about $US200 million to build, semi-submersibles cost $US550-650 million and drillships cost at least $US750 million.

He left his audience with an interesting thought.

"Most projects are still being based on oil prices in the $40 to $55 bracket," he said.

"What will happen if explorers and developers accept that $100 a barrel oil is here to stay? Surely demand for rigs would blow sky high."