Oil and gas firm Petrofac files for administration, putting thousands of jobs at risk
Petrofac, one of the biggest North Sea oil and gas contractors, has filed for administration, putting more than 2,000 jobs in Scotland at risk.The energy services provider said it had applied to the high court of England and Wales to appoint administrators, after it lost a big offshore wind project over its failure to meet contractual obligations.Petrofac, which employs about 7,300 people globally, said the administration plans applied only to its ultimate holding company and that it would continue to trade during the process.Uncertainty over the company’s continued viability will pile political pressure on the government, as it faces a backlash over plans to tackle the climate crisis by blocking new North Sea oil licences for exploration.Energy secretary Ed Miliband’s department said on Monday it was leading efforts across “all parts of government” to support Petrofac’s UK arm, which it employs about 2,000 people at its North Sea hub in Aberdeen.
The business has been in financial trouble for years, having faced a Serious Fraud Office investigation that resulted in a conviction in 2021 for failing to prevent bribery and the payment of more than $100m in penalties.Petrofac has been trying to restructure its finances for more than a year, and a formal plan was approved by the high court in May.But the company told investors on Thursday that the cancellation of a contract by TenneT, a European electricity grid operator and its biggest customer, meant that a solvent restructuring was no longer possible.The company said: “Having carefully assessed the impact of TenneT’s decision, the board has determined that the restructuring, which had last week reached an advanced stage, is no longer deliverable in its current form.”Labour promised in its general election manifesto not to grant licences for new oil and gas fields in the North Sea, and Miliband is consulting on legislation that will set out the government’s plans; a full timeline is yet to be announced.
The issue has left the energy secretary grappling with the competing challenges of tackling the climate crisis while also safeguarding jobs and energy security.Some business leaders have called on the government to remove windfall taxes on big oil companies.Donald Trump has called on the UK to expand oil projects in the North Sea.The US president said in September the UK had given up its “powerful edge” by making North Sea oil “so highly taxed that no developer, no oil company can go there”.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotion“They have tremendous oil left and, more importantly, they have tremendous oil that hasn’t even been found yet,” he said.
Petrofac has operations in the North Sea, as well as in the Middle East, north Africa and Asia.It was once a FTSE 100 company, but has struggled with high levels of debt and its shares were suspended from the London Stock Exchange in May after it failed to publish its 2024 results.Its market value at the time was about £20m.A spokesperson for the Department for Energy Security and Net Zero said: “The UK arm of Petrofac has not entered administration and is continuing to operate as normal, as an in-demand business with a highly skilled workforce and many successful contracts.“Petrofac’s administration is a product of longstanding issues in their global business.
The government will continue to work with the UK company as it focuses on its long-term future.“Ministers are working across all parts of government led by DESNZ in support of this.”
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Oil firm Petrofac enters administration, putting 2,000 jobs at risk; Greencore-Bakkavor food giant deal faces UK competition concerns – business live
Oil and gas firm Petrofac files for administration, putting thousands of jobs at risk
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