Petrofac Files for Administration, Endangering 2,000 Scottish Jobs

More than 2,000 jobs in Scotland are at risk as the energy services company Petrofac has filed for administration. The London-based firm confirmed on Monday that it submitted an application to the High Court of England and Wales to appoint administrators. This significant decision follows the termination of Petrofac’s contract for a major 2GW programme in the Netherlands, which has severely impacted the company’s financial stability.

Petrofac specializes in designing, building, managing, and maintaining infrastructure for the energy industry. Additionally, it provides essential training for personnel in the sector. Despite this setback, the company announced it would continue operations while seeking “alternative restructuring and mergers and acquisitions solutions” in collaboration with its creditors, including the Ad Hoc Group of Noteholders.

The company’s UK operations are primarily based in Aberdeen, where it plays a crucial role in managing North Sea 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 assured that the North Sea business would continue to operate normally, with management actively working to mitigate disruptions for clients and employees.

Once valued at approximately £6 billion in 2012, Petrofac has seen a significant decline in its market position in recent years. By May 2023, when its shares were suspended, the company’s market capitalization had plummeted to around £20 million, largely due to an ongoing investigation by the Serious Fraud Office and fluctuations in energy prices.

The situation has drawn criticism from political figures, including Andrew Bowie MP, the Shadow Secretary of State for Scotland. He described the administration filing as “disastrous” for Scotland, linking it to the Labour Party’s policies on energy taxation and regulations. Bowie stated, “The consequences of Labour’s harmful sanctions of increasing the windfall tax, ending the investment allowance, and opposing all new oil and gas licences are now being felt, resulting in the loss of thousands of jobs.”

He expressed concern for the employees affected by this decision, emphasizing the need for political support for the oil and gas sector. Bowie accused Labour leaders, including Keir Starmer and Ed Miliband, of undermining the industry. “Only the Conservatives are standing up for the oil and gas industry and recognizing its importance to our future energy security, jobs, and Scotland’s economy,” he asserted.

As Petrofac navigates this challenging period, the implications for its workforce and the broader Scottish economy remain significant. The company has not yet responded to requests for further comment regarding its ongoing operations and future plans.