Petrofac enters administration after failed restructuring and contract loss
Energy services provider Petrofac has officially filed for administration, marking a major turning point for one of the UK’s most recognized oil and gas engineering firms. The company, which employs around 2,000 people in Scotland and about 7,600 globally, confirmed that while its North Sea operations will continue “as normal,” its holding company is now under the control of administrators.
The announcement follows the collapse of a major financial restructuring plan after Dutch grid operator TenneT terminated a significant offshore wind contract with the company, effectively ending hopes of a turnaround.
In a statement, Petrofac said administrators will work to “preserve value, operational capability and ongoing delivery” while management continues to explore potential alternatives to rescue the business.
What Petrofac’s administration means for employees and clients
Despite the financial turmoil at the corporate level, Petrofac has reassured its clients and employees that day-to-day operations will continue, particularly in its North Sea oil and gas business, where it provides vital engineering and maintenance services to industry giants like BP and Shell.
A company spokesperson said, “Petrofac has a number of fundamentally strong businesses, and we are focused on delivering the best possible outcome for them through this process.”
The administration process is intended to protect the company from creditor action while a viable plan for restructuring or asset sale is considered.
Petrofac’s rise and fall
Founded in Texas in 1981, Petrofac grew rapidly into one of the world’s leading engineering and oilfield service providers. It was once a FTSE 100 company, valued at around £6 billion in 2012, thanks to lucrative contracts in the Middle East and the North Sea.
However, the company’s fortunes changed dramatically following a Serious Fraud Office (SFO) investigation launched in 2017, which exposed a series of bribery scandals linked to projects in Iraq, Saudi Arabia, and the UAE.
Petrofac faced a £70 million fine and a £7 million legal bill after prosecutors revealed that £57 million in bribes had been paid to secure contracts — a revelation that tarnished the company’s reputation and led to its exclusion from bidding on new projects.
By May 2025, Petrofac’s market value had plunged to just £20 million, and its shares were suspended from trading.
Political reaction and regional concerns
The announcement has sent shockwaves through Scotland’s energy sector, particularly in Aberdeen, where Petrofac remains a major employer.
Russell Borthwick, chief executive of the Aberdeen and Grampian Chamber of Commerce, described the news as “deeply concerning.”
“Thousands of skilled jobs across the region depend on companies like Petrofac,” he said. “This is another reminder that the UK government must urgently act to restore confidence and stability in the energy industry.”
Scotland’s First Minister John Swinney echoed those concerns, calling the situation “incredibly worrying” and pledging support for affected staff. He also urged the UK government to reconsider the 78% windfall tax imposed on North Sea oil and gas profits, which he argued was discouraging investment.
Meanwhile, UK Energy Minister Michael Shanks countered that the administration was the result of “long-standing issues” within Petrofac’s global operations, not government policy.
“The UK arm of Petrofac is a successful, growing company,” he said. “We all have a responsibility to support it, not to undermine it.”
What caused the final collapse
Industry analysts say the termination of Petrofac’s TenneT offshore wind contract was the final blow to its fragile restructuring efforts. The company had been struggling with high debts, delayed client payments, and cost overruns on loss-making renewable energy projects — including a “Thai clean energy” initiative.
The administration primarily affects Petrofac’s parent company, but its subsidiaries could still continue trading or be sold off to other energy firms. There’s also speculation that parts of Petrofac could be reconstituted under a new corporate entity.
Despite the uncertainty, analysts note that the firm still has valuable expertise in offshore engineering and a strong project pipeline that could attract buyers.
Looking ahead: The future of Petrofac and the North Sea workforce
For Petrofac’s 2,000 UK employees, the immediate future remains uncertain. While most operational teams are expected to keep working, the outcome of the administration process will determine whether the company can survive in its current form.
Petrofac’s collapse underscores the volatile state of the global energy services sector, where companies face mounting financial pressures amid the shift from fossil fuels to renewables.
As Petrofac’s administrators seek to stabilize the business, industry leaders are calling for government intervention to protect vital North Sea jobs and ensure continuity for energy transition projects.
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