Today, AF Gruppen and Aker Solutions have signed a Letter of Intent (LOI) to
merge the two companies existing offshore decom operations into a 50/50 owned
company with the goal of creating a leading global player for environmentally
friendly recycling of offshore assets. By establishing a pure, focused player
dedicated to unleashing global decom potential, the parties will make a
significant contribution towards a sustainable, green transition of the offshore
sector.

"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. Furthermore, the new entity will deliver
on the green, circular ambitions outlined in the UN's sustainable development
goals," said Amund Tøftum, CEO of AF Gruppen.
 
"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. 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.
Sustainability and circular economy ambitions will be key focus areas for the
new entity, and we see increased activity in the market for decommissioning and
recycling moving forward," said Kjetel Digre, chief executive officer of Aker
Solutions. 

A roadmap to circularity 
The recycling of steel from decommissioned oil platforms represents a
significant contribution to reducing greenhouse gas emissions compared with
ordinary steel production. Goal 12 in the UN's sustainable development goals
(SDG) is to ensure sustainable consumption and production patterns. It is stated
that urgent action is needed to decrease our reliance on raw materials and
increase recycling and "circular economy" approaches to reduce environmental
pressure and impact. These goals will be met by viewing old structures as
material banks of dynamic and valuable resources, rather than fixed and final
objects.

Solving a significant societal challenge 
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. In
recent years, AF Offshore Decom has achieved a source separation rate of 94 per
cent for the structures for recycling, 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. In 2020, AF Offshore Decom demolished and facilitated the
recycling of approximately 22,000 tonnes of steel, corresponding to a reduction
of alternative CO2 emissions of 22,000 tonnes.

Global reach based on Norwegian competence 
Decommission of the offshore market has a vast untapped potential globally, with
approx. 10,000 operational platforms. The North Sea alone holds a significant
potential with expectancy of more than 900,000 tonnes of top deck to be removed
during the period from 2020 to 2029. This applies to the British, Norwegian,
Danish and Dutch sectors. Based on today's current annual decommissioning spend,
it implies that it will take operators approx. 100 years to deplete liabilities
for current assets. Thus, a further ramp up of pace is necessary, leading to a
positive contribution to the demand for this type of services.

Superior execution power and capabilities 
The two companies represent unmatched and complementary engineering and
construction capabilities at land and at sea. Jointly, the two units brings
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 NOK 2.5 billion. 

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 (NCA).


For further information:

CEO AF Gruppen: Amund Tøftum, tel. +47 920 26 712
CFO AF Gruppen: Sverre Hærem, tel. +47 952 45 167

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