Maersk Drilling and Maersk Supply set up decommissioning JV

Danish offshore driller Maersk Drilling and vessel provider Maersk Supply Service have established a joint venture company focused on decommissioning market. 

The 50:50 JV between Maersk Drilling and Maersk Supply Service will leverage the companies’ heritage of over 50 years of operations to provide decommissioning services to oil and gas operators, the two companies said on Thursday.

According to their joint statement, after decades of production, an increasing amount of offshore oil and gas fields are approaching the end of their economic life and, in the North Sea alone, more than 400 fields are expected to cease production by 2026 at an estimated cost of $56 billion. Globally, over 700 fields are expected to require decommissioning, the companies said.

Drawing on Maersk Drilling and Maersk Supply Service’s assets and technical capabilities, the JV will initially offer bundled solutions for up to 80% of the process required in decommissioning an oil field. The bundled solutions will, in addition to project management, cover work scopes such as plug and abandonment of wells, towage of floating units and removal of subsea infrastructure. In the longer term, the JV plans to provide the full end-to-end process of decommissioning.

Jørn Madsen, CEO of Maersk Drilling, said: “With the growing need for decommissioning mature fields, governments and oil and gas operators are looking for experienced partners to manage and perform this challenging task. By leveraging the strong track record of the two companies, as well as our complementary asset base and competencies, we can lower the risk and reduce the overall cost for the customers.”

Maersk Drilling and Maersk Supply Service have both done decommissioning work for various clients.

Since 2016, Maersk Supply Service has been project managing and executing the full scope of decommissioning services for the Janice, James and Leadon subsea fields in the UK North Sea for the operator  – former Maersk Oil, now Total.

While Maersk Drilling did the plug and abandonment (P&A) for the James and Leadon wells, Maersk Supply Service provided the marine asset coverage on all three subsea fields and took on the responsibility for the engineering, subcontractor management, offshore planning, interface management and associated logistics, as well as the disposal of recovered facilities from the seabed through management of waste disposal contractors.

Steen S. Karstensen, CEO of Maersk Supply Service, said: “By combining our marine knowledge and experience from recent decommissioning projects, we can provide oil and gas operators bundled solutions with one point of contact for the majority of decommissioning work scope. With the experience and asset base brought to the JV by both companies, and the team to see it through, I am confident that the decommissioning JV can offer attractive and flexible solutions to the market.”

Maersk Drilling and Maersk Supply Service will invest an equal amount in the JV over the coming year. The joint investment is approximately $20 million covering the first years of operations. In addition, the JV partners will provide assets to the JV through standard commercial conditions. With the projection of adding up to three new projects per year after 2020, the JV’s revenue is expected to grow steadily over the first five years, the duo said.


Organization & leadership 


The foundation of the JV will be a scalable base organization, covering only core capabilities and drawing upon support from Maersk Drilling and Maersk Supply Service. The JV will be headquartered at the Maersk Drilling and Maersk Supply Service joint headquarters in Lyngby, Denmark.

Lars Banke has been appointed Chief Executive Officer of the JV and will join the company from Total in June 2018. Banke has a background in mechanical engineering from Denmark’s Technical University and has worked in various Maersk companies since 2001, most recently acting as site manager for the construction of the Ailsa FSO in Singapore, for the Culzean project.

Jens Klit Thomsen, currently Head of Decommissioning Business Development at Maersk Supply Service has been appointed Chief Commercial Officer of the JV as of April 1. Carsten Sander Jacobsen has been appointed Chief Technical Officer as of May 1. He is currently Head of P&E Engineering in INEOS Denmark, responsible for field development and decommissioning activities.

An individual corporate brand for the JV will be established in the coming months.

The JV will not impact the ongoing work in parent company of the two, A.P. Moller – Maersk, to establish new ownership structures for each of the partner companies.

To remind, the Maersk group has been working to divest its energy related businesses since 2016, following a decision to split the company into two divisions: one focused on shipping and logistics, the other on oil and gas sector. It has already sold its oil and gas producer, Maersk Oil, and tanker business, Maersk Tankers.

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