Petrofac Faces Administration as North Sea Jobs Hang in the Balance

About 2,000 Petrofac employees working in the North Sea are facing an uncertain future after the oil services company, once a FTSE 100 stalwart, filed for administration. Petrofac, which boasts a global workforce of more than 8,000, specialises in building, operating and maintaining energy infrastructure for the oil, gas and wider renewables sectors.

The move comes after the company’s largest client, Dutch grid operator TenneT, cancelled a multi-billion pound contract for wind farm development, citing breaches of contractual obligations. This deal, valued at roughly €13 billion and awarded in 2023, was noted as the largest in Petrofac’s history. With its financial restructuring already on shaky ground, the loss of this key contract proved to be a decisive blow.

Petrofac clarified that the administration proceedings relate solely to its holding company, with its North Sea operations continuing as normal for now. Teneo, expected to be appointed as administrators imminently, will seek buyers for profitable arms of the group including its UK operations. Michael Shanks, the energy minister, expressed optimism about the prospects for the UK division, highlighting two recent North Sea contract extensions as evidence of ongoing viability.

Despite reassurances that core UK operations remain unaffected, anxiety remains among the 1,200 offshore and 800 onshore employees, most of whom are based in Scotland. Aberdeen, home to Petrofac’s principal UK base, stands at the centre of the energy transition—a process many believe has been clouded by policy uncertainty and industry upheaval.

Leaders from trade bodies and regional political representatives have voiced serious concern, emphasising Petrofac’s central role in both traditional and renewable energy supply chains. North Sea job security has suffered amid policy shifts—including windfall tax increases and a move away from new drilling approvals. While the government attributes Petrofac’s collapse to longstanding global business challenges rather than recent policy, the event is already sparking debate across Westminster and Holyrood.

Petrofac’s decline began several years ago, exacerbated by successive oil price crashes, construction contract losses—particularly in Thailand—and a Serious Fraud Office investigation that led to punitive fines and damaged client confidence. Suspended shares and rejected restructuring plans left the company in a precarious position going into the TenneT debacle. Lenders are presently permitting deferrals on debt interest, as administrators and executive management seek alternative restructuring or mergers and acquisitions to preserve operations and value.

The UK government and company management continue to stress their commitment to minimising disruption. As administrators step in, the future of thousands of workers and the wider North Sea supply chain hinges upon the success of new ownership and restructuring efforts.