Sharjah-based oilfield services company Petrofac says UAE operations are continuing, despite laying off 180 people after a multibillion-dollar Dutch offshore wind contract was cancelled as the firm struggles with mounting debts.
“Delivery of Petrofac’s operations across its UAE project portfolio are continuing as normal,” a company representative told The National on Monday.
“Petrofac is focused on preserving value, operational capability and ongoing delivery across the group’s operating and trading entities while options are being advanced to underpin their long-term future.”
About 180 people in the UAE were laid off after the Netherlands-based electricity grid operator TenneT cancelled Petrofac’s contract for the development of a two-gigawatt offshore wind project in the North Sea.
The contract, which Petrofac won in 2023 alongside Japan's Hitachi, was worth €13 billion ($15 billion) and the company's largest award to date.
However, in October TenneT cancelled a portion of the award, plunging Petrofac into administration.
The company has debts amounting to about $4 billion, according to a judgment from July in a case brought by some creditors. Petrofac has liabilities of about $909 million to secured creditors and $3 billion to unsecured creditors.
The latest crisis is a culmination of several events, including the $105 million fine imposed by the UK Serious Fraud Office in 2021 against the company on charges of bribery.
Petrofac was in the process of a court-ordered restructuring plan this year, before the cancellation of the Dutch contract affected its cash flow.
The Petrofac representative told The National that early-release notices were sent to employees whose roles were connected to the Dutch offshore wind programme.
“We recognise this is a challenging time for our people and we remain in close co-ordination with them and the Ministry of Human Resources and Emiratisation,” the representative said.
Petrofac, which was founded in Tyler in eastern Texas in 1981, is now a large oil and gas services company with operations mainly concentrated in the Middle East, North Africa and the North Sea. It established a base in Sharjah in 1991 through its international arm and has a long-standing legacy of oil and gas work in the UAE and around the region, including Saudi Arabia and Iraq.
It has 30 offices around the world and employs 8,500 people whose jobs and gratuity are now uncertain. Petrofac has not clarified which jobs are most at risk, though reports in the UAE say unpaid dues could exceed Dh27 million ($7.35 million).
Petrofac, which was listed on the London Stock Exchange in 2005, reached a market capitalisation peak of more than £8 billion ($10.5 billion) in 2012. However, a bribery scandal involving its employees in 2017 brought it under the scrutiny of the UK’s SFO. With rising debts, the company applied to the High Court of England and Wales for administration in October. It was also delisted from the London bourse.
Petrofac reported consecutive annual losses, increasing each year – from $192 million in 2020 to $245 million in 2021, $320 million in 2022 and $505 million in 2023 – as revenue plunged. The company did not report full-year earnings for 2024 because of its restructuring.
In the UAE, Petrofac was awarded key projects for Abu Dhabi National Oil Company (Adnoc). In 2020, Petrofac was awarded a $40 million project by the Sharjah National Oil Corporation for engineering services.
In June, Adnoc awarded Petrofac an engineering, procurement and construction management services contract for a $1.2 billion project to expand its gas production facilities on Das Island.
It also won a $330 million contract in January from Adnoc Gas for the construction of a new gas compressor plant at Habshan complex in Abu Dhabi.
Petrofac also secured a $615 million contact to build one of the largest carbon capture projects in the region in 2023. An Adnoc Gas representative told The National that Petrofac Emirates, the company's local subsidiary, continued to deliver on its obligations.
“There has been no impact on our projects to date,” he said. “We maintain regular engagement with Petrofac Emirates and other stakeholders to safeguard project timelines and ensure continuity of delivery.”
A source with knowledge of the Habshan project, a former Petrofac employee, said work on the scheme is 60 per cent to 70 per cent complete.
Based on a rough estimate of Petrofac’s project pipeline, its collapse could affect multibillion-dollars' worth of projects in the region, with the UAE most exposed to its fallout, according to market data.
Last month, Petrofac submitted the lowest bid for a $1.4 billion water injection project commissioned by Kuwait Oil Company.
Another source with knowledge of Petrofac's operations in Saudi Arabia, where it worked on several refining and gas projects, said its latest wins could be allocated to local companies. “They were aggressive [in pricing] to win contracts,” the source said.
