North Sea Jobs at Risk: Petrofac Administration Filing
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Petrofac Applies for Management, Threatening North Sea Jobs
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Updated October 27, 2023 at 11:13 AM GMT
What Happened?
On October 26, 2023, UK-based oilfield services company Petrofac announced its intention to seek administration protection in the High Court of England and Wales. This move puts thousands of jobs in the North Sea oil and gas industry at risk. The request follows the termination of a major offshore wind project contract with Dutch national grid operator TenneT.
The company cited the termination of the TenneT contract as a key factor, stating it had a “material impact” on its financial position. The contract, related to the Hollandse Kust Zuid Alpha offshore wind farm, was cancelled due to concerns over Petrofac’s financial stability.
Financial Impact and Job Losses
Petrofac reported a projected reduction in revenue from approximately £190.7 million in 2023 to £115 million in 2024. The company employs around 13,000 people globally,with a important portion working on North Sea projects. While the exact number of UK jobs at risk is still being determined, industry analysts estimate it could be in the thousands.
| Year | Projected Revenue (millions £) |
|---|---|
| 2023 | 190.7 |
| 2024 | 115.0 |
The administration application covers Petrofac’s parent company, but crucially, the UK arm of Petrofac is continuing to operate as normal, with existing contracts unaffected. The Department for Energy Security and Net Zero confirmed this, stating the UK business is ”in-demand” and has a “highly skilled workforce.”
Why Did This Happen?
The Department for Energy Security and Net Zero attributed Petrofac’s situation to “long-standing issues in thier global business.” Reuters reports that Petrofac has faced challenges in recent years, including project delays, cost overruns, and financial difficulties.The TenneT contract cancellation appears to have been the final blow.
The company’s struggles also reflect broader trends in the oil and gas industry, including fluctuating oil prices and increasing competition. The