The Norwegian Competition Authority (NCA) has not raised any objections regarding the decommissioning joint venture proposed by AF Gruppen and Aker Solutions.
Aker Solutions and AF Gruppen signed the letter of intent to merge its existing offshore decommissioning operations into a 50/50 owned company on 1 July 2021. The aim of this merger is to create a global player for environmentally friendly recycling of offshore assets and provide a significant contribution towards a sustainable, green transition of the offshore sector, according to Aker Solutions.
The deal was subject to due diligence and regulatory approvals by the Norwegian Competition Authority (NCA), which says there are no objections to this joint venture . The expected timeline for the transaction completion is scheduled for the fourth quarter of 2021, however, it is still subject to due diligence and final board approvals.
The global offshore market has a vast untapped decommissioning potential as there are approximately 10,000 operational platforms. The North Sea alone holds 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.
AF Gruppen and Aker Solutions intend to recycle as much of the materials from the decommissioned offshore platforms as possible. It is worth mentioning that AF Offshore Decom has managed to achieve a source separation rate of 94 per cent for the recycling of structures where the main component is metal. Reusing steel results in 70 per cent less CO2 emissions than ore-based production, which corresponds to an emission reduction of 1 kg CO2 per kilo of recycled steel.
It could take operators approximately 100 years to deplete liabilities for current assets as inferred by Aker Solutions after taking into consideration the current annual decommissioning spend. Therefore, it is imperative to ramp up the pace for a positive contribution towards this type of service. Once the merger is complete, the two companies expect to have an order backlog of approximately $292 million.