After years of restructuring and cost-cutting efforts, UK-listed oilfield services group Petrofac on Monday filed for administration, following the termination of its biggest contract.
Petrofac’s directors have applied to the High Court of England and Wales to appoint administrators to Petrofac, said the company, which provides infrastructure and engineering services to the oil and gas, renewables, and power supply industries.
When appointed, administrators will work alongside Executive Management to preserve value, operational capability and ongoing delivery across the Group’s operating and trading entities, Petrofac said today.
The collapse was triggered by last week’s announcement of Dutch electricity grid operator TenneT that it had exercised its right to partial termination of a major contract related to the Petrofac scope.
TenneT signed in March 2023 a framework cooperation agreement with a consortium consisting of Hitachi Energy and Petrofac for six 2 gigawatt (GW) projects out of the total of fourteen 2-GW grid connection systems that TenneT will realize via the 2GW Program.
However, Petrofac, which has been undergoing a financial restructuring since 2024, has not been able to meet its contractual obligations, leading to TenneT terminating the Petrofac scope.
“At the same time, a solution has been put in place involving a consortium of Hitachi Energy and a replacement contract,” TenneT said last week.
Today, Petrofac noted that “Having carefully assessed its options, and the impact of TenneT’s decision to terminate Petrofac’s scope of work on the 2GW programme in the Netherlands, the Directors of Petrofac Limited (the Group’s ultimate holding company) have applied to the High Court of England and Wales to appoint administrators to Petrofac Limited.”
More than 2,000 job are at risk in Scotland because of Petrofac’s collapse, Sky News reported on Monday.
Yet, sources close to Petrofac told Sky News that they hope Petrofac’s North Sea operations could soon find a buyer.
Petrofac’s collapse and potential job losses come as the UK government is being urged to avoid accelerating the decline of North Sea oil and gas production through policies, especially the windfall tax on operators.
By Tsvetana Paraskova for Oilprice.com
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