‘Future Made in Denmark’: Unions, business lash Labor for sending Northern Endeavour overseas

Labor is under fire for sending a government-owned oil vessel to Denmark for dismantling, bypassing local industry as its decommissioning bill is set to climb beyond $1bn.

Labor has spurned local bids for the recycling of the Northern Endeavour and will instead send the vessel to Denmark. Picture: Department of Industry, Science and Resources.

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Labor has sidelined Australian industry in its recycling plans for the most expensive oil infrastructure clean-up in the nation’s history, opting to transport a hazardous vessel more than 13,000km to a Danish shipyard – prompting fierce criticism from unions and local businesses.

Despite the Albanese government’s pledge to revive domestic industry through its Future Made in Australia agenda and use the vessel to kickstart a local decommissioning sector, The Australian can reveal that the Northern Endeavour, a floating oil platform, will be sent to Denmark – with at least three Australian bidders passed over for the job.

Moored 550km northeast of Darwin in the Timor Sea, the Northern Endeavour has not produced oil for six years and fell into the federal government’s ownership in 2020 after its previous ­proprietor, Northern Oil and Gas Australia, collapsed — saddling taxpayers with a massive disposal bill set to balloon beyond $1bn. NOGA acquired the Northern Endeavour from Woodside for a token sum in 2015 and the company’s eventual liquidation sparked deep concern over Australia’s ageing oil and gas assets, handing the industry a widely disdained levy to fund the decommissioning process.

Signs of rust of the Northern Endeavour. Picture: Department of Industry, Science and Resources.

In 2022 dismantling works on the vessel began, with Resources Minister Madeleine King promising to maximise opportunities for Australian businesses in that process. Late last year, her department tendered for the recycling of the 43,000-tonne platform.

The winner of the government tender – estimated by industry insiders to be worth as much as $100m – is US ship-breaking company Modern American Recycling Services (MARS) which will scrap the vessel at its facility at Frederikshavn.

Domestic bids included a proposal to dismantle the 274m-long platform in Whyalla, supplying tens of thousands of tonnes of recycled material to the steelworks, while another plan put forward disassembly at the Henderson shipyards in Western Australia.

Anthony Albanese’s Future Made in Australia program will channel billions into initiatives such as solar panel manufacturing and green hydrogen production.

As part of the scheme, Ms King released Labor’s “offshore decommissioning roadmap” in December, promising to maximise the involvement of Australian industry and support the creation of new jobs in dismantling the Northern Endeavour. “The onshore components of its decommissioning journey will, where possible, take place in Australia,” the roadmap said. “This will help grow the local industry in advance of further industry decommissioning projects in the future.”

Resources Minister Madeleine King. Picture: NewsWire / Martin Ollman

Asked by The Australian if it was impossible to decommission the Northern Endeavour locally, a spokesman for Ms King said the government’s decision to contract MARS followed a “global, competitive and open tender”.

“This is one of the few facilities in the world with the capacity to recycle the Northern Endeavour FPSO,” the spokesman said.

He contradicted claims by Australian bidders and unions that the job could be done here.

“While there are no purpose-built facilities in Australia which are equipped to handle and recycle a vessel of the scale and complexity of the Northern Endeavour FPSO, Australian industry has led the works to date for the Northern Endeavour decommissioning program,” he added, pointing to work completed by UK oil and gas contractor Petrofac.

That company has been paid in excess of $410m for its work to clean and decontaminate the floating platform and its associated subsea equipment.

“There will be ongoing opportunities for domestic industry involvement in the Northern Endeavour decommissioning program,” the spokesman said.

He argued that the breakdown and recycling of the vessel only represented 2 per cent of the “total work” associated with the project, but industry disputes that figure. “I just don’t see how they can get that number,” an industry source said.

Others noted that the spending didn’t account for a separate contract to Dutch company COSCO to dry tow the platform with its semi-submersible heavy transport vessel, the Hua Rui Long, all the way to Denmark via Singapore – a job expected to cost tens of millions of dollars more.

Unions lashed the decision to send the Northern Endeavour overseas for recycling with Maritime Union assistant national secretary and ALP vice president Mich-Elle Myers describing the department’s decision to spurn local bids as an “absolute scandal”, and accused the federal government of selling out businesses.

“The government has every opportunity to walk the talk on a ‘Future Made in Australia’. ­Instead, they’ve handed the ­Australian oil and gas industry’s clean-up to a foreign yard, bypassing local workers and businesses,” Ms Myers said. “The decision to overlook local bidders and hand the work to an American company operating in Denmark raises serious questions about whether the department ever intended to back a local ­decommissioning sector at all.”

Australian Workers Union national secretary Paul Farrow described the decision as a “blow to our steel workers” and rejected the government’s claim that the recycling process could not be completed in Australia.

Maritime Union of Australia assistant national secretary Mich-Elle Myers and Australian Workers Union national secretary Paul Farrow.

“Our steel workers are up against the wall,” Mr Farrow said. “They can’t afford to have government preference the US and Denmark while local industry is ignored. A Future Made in Australia should be one where our workers give this vessel a new life as quality local steel.”

The Offshore Alliance, representing workers in the oil and gas industry – including those employed at the Northern Endeavour – also questioned the decision, saying there was “no ­justifiable reason” to send the platform to Denmark, and called for the government to reverse the decision. “The Offshore Alliance encourages the government … to fundamentally rethink its approach to the decommissioning of Australian offshore facilities,” its spokesman Brad Gandy said.

Industry sources said the government’s decision to award the recycling contract to a foreign company was driven by cost and signalled to the oil and gas sector that ship-breaking firms weren’t up to the task — effectively giving the green light to offshore future work. “They just went with the cheapest option,” said one person familiar with the bid process.

Labor’s decision to transport the Northern Endeavour to Denmark comes as the oil and gas industry confronts a $60bn pipeline of future decommissioning work – half of it expected within the next decade – according to the Centre for Decommissioning Australia, which represents some of the world’s largest players in dismantling such infrastructure.

Francis Norman, the centre’s chief executive, said recycling oil and gas infrastructure once it became non-operational presented a significant opportunity for industry. “This material is of high value,” Dr Norman said. “There’s a lot of value in that material, and it would be a shame to lose the opportunity for us to have a greater recycling industry here that is at least partially fed by the materials that are coming out from decommissioning.”