Trouble in the North Sea? Petrofac files for administration amid debt crisis; 2,000 jobs at risk

Approximately 2,000 jobs are at risk after Petrofac, one of the largest oil and gas contractors in the North Sea, filed for administration.

According to a report by Guardian, the company said it has approached the High Court of England and Wales to appoint administrators after losing a key offshore wind contract, which did not meet its obligations.

Petrofac, which employs approximately 7,300 people worldwide, said the administration process is expected to be handled by business advisory firm Teneo and applies only to its parent holding company. The company added that it will continue normal operations during the process.

Petrofac has spent more than a year trying to resolve its financial woes, with a court-approved restructuring plan cleared in May. The company is burdened with debt that could be as high as $4 billion (£3 billion), according to a court ruling from July in a case brought by some of its creditors.

The oilfield services firm has been struggling for years, starting with a 2017 investigation by the UK’s Serious Fraud Office, which led to a conviction in 2021 for failing to prevent bribery and fines of over $100 million. The scandal made it more difficult for Petrofac to win new contracts.

Although the company briefly managed to recover, the pandemic, which hit soon after, worsened its financial troubles.

The company told investors on Thursday that it could no longer continue with a solvent restructuring after its largest customer, European electricity grid operator TenneT, canceled a crucial contract to build offshore wind projects off the Dutch coast.

“Having carefully assessed the impact of TenneT’s decision, the board has determined that the restructuring, which last week reached an advanced stage, is no longer deliverable in its current form," the company said, as cited by the Guardian.