Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK oilfield services group Petrofac has applied to enter administration, putting thousands of North Sea jobs at risk.
Petrofac, which designs, builds and operates energy facilities, said it had applied to the High Court of England and Wales to appoint administrators after Dutch national grid operator TenneT ended its work on a major offshore wind project over its failure to meet contractual obligations.
Petrofac, which employs about 7,300 people, said the plans for administration applied only to the group’s holding company and that it would continue to trade during the process and retained the support of key creditors.
As well as the UK’s North Sea, Petrofac also has significant operations in the Middle East and north Africa.
Petrofac was once a FTSE 100 company but has been embroiled in a near-decade-long crisis, including a corruption probe by the UK’s Serious Fraud Office that ended in a $95mn fine in 2021 for failing to prevent bribery in the Middle East.
It has suffered from high debt levels and the impact of shutdowns during the pandemic, and was embroiled in a two-year financial restructuring when its shares were suspended from the London Stock Exchange in May.
The suspension followed Petrofac’s inability to publish its 2024 results and came when its market value was just over £20mn.
“Options for alternative restructuring and M&A solutions are being actively explored with its key creditors,” Petrofac said in a statement on Monday.
“When appointed, administrators will work alongside executive management to preserve value, operational capability and ongoing delivery across the group’s operating and trading entities.”
The collapse risks stoking concern about the future of the North Sea and UK oil and gas production as the basin is well past its heyday and oil majors have shifted investment to other parts of the world.
However, MPs and industry figures fear its decline is being accelerated by policies such as a windfall tax, put in place under the former Conservative government and increased under Labour, and a planned ban on new exploration licences.
A report by the parliamentary Scottish affairs committee last week found that the UK’s oil and gas workforce had fallen by roughly 75,000 jobs since 2016, from 190,700 to 115,000 in 2024.
The Department for Energy Security and Net Zero said in a statement that Petrofac’s administration was a “product of long-standing issues in their global business”.
It added: “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. The government will continue to work with the UK company as it focuses on its long-term future.”
Credit: Source link
