Offshore energy firm Petrofac has filed for administration after a year of financial strain and the termination of a major contract with Dutch grid operator TenneT, putting 2,000 jobs in Scotland at risk.
The move puts one of the UK’s best-known energy engineering firms in jeopardy, although its North Sea operations will continue to operate normally.
The company confirmed that it had applied to appoint administrators for its holding entity while exploring alternative restructuring options and possible sale opportunities, Sky News said.
Petrofac said on Monday that its trading operations remain active and that it is “in close and constant dialogue with its key creditors and stakeholders as it actively pursues alternative options for the group.”
According to people close to the situation, a buyer for Petrofac’s North Sea business could emerge within days, Sky News reported.
Administrators are expected to work alongside management to preserve value, sustain operations, and maintain service delivery.
Collapse follows failed restructuring and contract cancellation
The decision to file for administration came after Dutch grid operator TenneT cancelled a major offshore wind contract with Petrofac.
The company said that the cancellation made its ongoing solvent restructuring plan “no longer deliverable in its current form.”
“Having carefully assessed the impact of TenneT’s decision, the Board has determined that the restructuring, which had last week reached an advanced stage, is no longer deliverable in its current form,” the company said.
Petrofac’s advisers at corporate finance firm Teneo are expected to oversee the administration process.
The firm added that administrators would aim to preserve operational capacity and ensure continuity across the group’s trading units.
The administration marks a sharp reversal for Petrofac, which had secured High Court approval for a restructuring plan earlier this year intended to cut debt and inject new cash.
However, the decision was later overturned, prompting new negotiations with creditors.
Once a FTSE 100 company, Petrofac faces debt and legacy challenges
Founded in Texas in 1981, Petrofac designs, constructs, and operates facilities for oil, gas, and renewables projects.
The company, headquartered in London with major offices in Aberdeen, Woking, and Great Yarmouth, employs around 7,300 people worldwide, including about 2,000 in Scotland.
Petrofac was once valued at more than £6 billion and ranked among the FTSE 100 firms.
Its decline began with a Serious Fraud Office investigation that led to a 2021 conviction for failing to prevent bribery, resulting in millions of pounds in penalties.
Since then, the company has faced mounting debt, contract delays, and rising costs that undermined its financial position.
The firm has spent much of the past year attempting to stabilise its balance sheet through debt write-offs and capital injections, but worsening conditions in the offshore energy sector and the collapse of the TenneT contract proved decisive.
A sensitive moment for UK’s North Sea policy
Petrofac’s potential collapse comes at a politically delicate time.
The firm’s troubles highlight the fragility of the North Sea supply chain as the UK debates the future of domestic oil and gas drilling.
Energy Secretary Ed Miliband faces growing pressure to grant new exploration licences despite Labour’s manifesto commitment to limit such approvals.
For now, Petrofac’s operations in the North Sea will continue while administrators and potential buyers explore a solution that could preserve one of the sector’s key employers.
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