Petrofac Files for Administration, Threatening Over 2,000 Jobs

More than 2,000 jobs in Scotland are at risk following the announcement that Petrofac, a significant player in the North Sea platform sector, has filed for administration. On October 30, 2023, the London-based company confirmed its application to the High Court of England and Wales for the appointment of administrators. This decision follows the termination of a crucial contract related to a major 2GW programme in the Netherlands, which has severely impacted the company’s financial stability.

Petrofac specializes in the design, construction, management, and maintenance of infrastructure for the oil and gas industry. It also provides training for personnel involved in these sectors. Despite the filing, the company indicated that it would continue operations while it seeks “alternative restructuring and M&A (mergers and acquisitions) solutions” with key creditors, including the Ad Hoc Group of Noteholders.

The UK operations of Petrofac are headquartered in Aberdeen, where the company manages various oil platforms for major clients such as BP and Shell. A spokesperson for Petrofac stated, “Petrofac has a number of fundamentally strong businesses, and we are focused on delivering the best possible outcome for them through this process.” They added that the North Sea business would operate as usual, and management is working to minimize disruption for clients and employees.

Historically, Petrofac was valued at around £6 billion at its peak in 2012. However, recent years have seen a significant decline in its worth, with shares suspended in May 2023 when the company’s value dropped to around £20 million. This downturn has been attributed to an ongoing investigation by the Serious Fraud Office and the volatile nature of energy prices.

The potential job losses have drawn significant political commentary. Andrew Bowie MP, the Shadow Secretary of State for Scotland, described the news as “disastrous” for the region. He criticized recent government policies, suggesting that Labour’s increased windfall tax, elimination of the investment allowance, and opposition to new oil and gas licenses have contributed to the crisis, resulting in the loss of thousands of jobs.

Bowie expressed sympathy for the employees affected by the situation, stating, “At the heart of this are Petrofac’s staff, and my thoughts go out to the employees whose jobs have been put at risk.” He further accused Labour leaders, including Keir Starmer and Ed Miliband, of undermining the oil and gas industry. According to Bowie, the current situation must serve as a wake-up call for both Labour and the Scottish National Party (SNP) to support the sector rather than disregard it.

Petrofac has not issued further comments beyond its initial statement regarding the administration process. The outcome of this situation remains uncertain, but the implications for the Scottish job market could be significant if the company cannot secure a viable path forward.