Aker Solutions and AF Gruppen Merge to Accelerate Rig Decommissioning
Anticipating an accelerating pace of the decommissioning of offshore oil rigs as part of the global decarbonization efforts, Norway’s Aker Solutions and AF Gruppen plan to merge the two companies’ existing offshore decommissioning operations into a 50/50 owned company. By establishing a focused operation dedicated to global decommissioning, they believe positions the business to be part of a sustainable, green transition of the offshore sector.
"By combining Aker Solutions’ offshore, engineering, and project execution capabilities with AF Gruppen’s decommissioning and construction capabilities, we aim to increase customer efficiency throughout the decommissioning process and maximize the total recycling potential,” said Kjetel Digre, chief executive officer of Aker Solutions. “The company will be uniquely positioned to offer integrated end-to-end services from well plug and abandonment to planning, removal, dismantling, and recycling at its own environmental base."
The business concept is based on solving a significant societal challenge by removing and recycling decommissioned oil platforms. The unit aims to recycle as much of the materials from the decommissioned offshore platforms as possible. Jointly, the two units bring extensive capabilities in running large-scale offshore projects, lifecycle and value chain competence, and a broad global portfolio of customers and projects. The joint company will have an order backlog of approximately $290 million.
In recent years, AF Offshore Decom has achieved a source separation rate of 94 percent for the structures for recycling, where the main component is metal. The recycling of steel from decommissioned oil platforms represents a significant contribution to reducing greenhouse gas emissions compared with ordinary steel production. In 2020, AF Offshore Decom demolished and facilitated the recycling of approximately 22,000 metric tons of steel.
"Our ambition is to establish a unique recycling player, positioned to offer a total decommissioning solution for the global offshore recycling market. The two parties have complementary strengths and capabilities, with potential to build a global offshore recycling powerhouse," said Amund Tøftum, CEO of AF Gruppen.
Decommission of the offshore market has a vast potential globally, with approximately 10,000 operational platforms. The North Sea alone holds a significant potential with an expectancy of more than 900,000 metric tons of top deck to be removed during the period from 2020 to 2029. This applies to the British, Norwegian, Danish, and Dutch sectors.
The transaction is expected to be completed during the second half of 2021 and is subject to due diligence and regulatory approvals by the Norwegian Competition Authorities.