Petrofac, one of the UK’s crucial North Sea oil and gas contractors has filed for administration, putting 2,000 jobs at risk.
The company, which sends staff to run offshore platforms, has called in restructuring group Teneo to act as its potential administrator, which could be triggered as early as Monday morning.
In a statement to the stock exchange early Monday, the company said it had applied to the High Court of England and Wales to appoint administrators to its ultimate holding company.
“This action is a targeted administration of the holding company only, while the group’s operations will continue to trade,” it said.
An estimated 2,000 direct jobs are at risk, mostly in Scotland, with many more in the company’s supply chains and partners.
The business is said to be financially sound and vital to the UK’s North Sea operations, but is being dragged down by financial disasters at a separate Petrofac operation based in Abu Dhabi.
The Aberdeen-based company’s British workers provide operation and construction services for many of the UK’s offshore platforms, including Shell, BP, Ithaca Energy and TotalEnergies.
Petrofac designs, constructs and operates offshore equipment for energy companies throughout UK waters – so a collapse would have repercussions throughout the sector.
It would also be hugely damaging for Aberdeen, where most of Petrofac’s operations and staff are based, and is likely to play into the looming Scottish parliament elections where Labour is desperate for victory.
Restructuring deal fell through
A potential restructuring deal worked on for a year collapsed in disarray last week after Petrofac’s biggest client cancelled a multibillion-pound contract.
TenneT, power grid operator for the Netherlands and much of Germany, terminated its multi-year contract to build offshore platforms and onshore converter stations for six wind farms.
From Friday, chief executive Tareq Kawash, and the board, chaired by former finance director Rene Medori, engaged in emergency talks with the company’s lenders before this morning’s update.
The statement that the move “followed TenneT’s decision to terminate Petrofac’s scope of work on the 2GW programme in the Netherlands …The company is actively exploring restructuring and M&A solutions with key creditors, including the Ad Hoc Group of Noteholders, who are providing continued forbearance.
“Administrators will work with executive management to maintain value and operational capabilities across the Group’s operating entities.”
A source close to Petrofac stressed that the UK arm of the group had not been beset by any loss-making contracts and would be in a strong position to secure its future.
A spokesman 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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