Petrofac faces deepening crisis after Dutch contract collapse

Sharjah-based oilfield services company Petrofac says its projects in the UAE remain on track, even as the firm lays off staff and struggles under billions of dollars in debt following the cancellation of a major offshore wind contract in the Netherlands.

“Delivery of Petrofac’s operations across its UAE project portfolio are continuing as normal,” a company representative told The National on November 24, stressing that the company 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 UAE-based employees were dismissed after Dutch grid operator TenneT cancelled Petrofac’s portion of a €13 billion offshore wind contract — the largest award in the company’s history. Petrofac had secured the project in 2023 alongside Japan’s Hitachi.

The cancellation in October plunged Petrofac into administration and deepened the company’s financial crisis. Court filings from July revealed Petrofac is carrying approximately $4 billion in debt, including $909 million owed to secured creditors and $3 billion to unsecured creditors.

The company’s difficulties stem from a series of setbacks, including a $105 million fine imposed by the UK Serious Fraud Office in 2021 on bribery charges. Petrofac had been implementing a court-ordered restructuring plan this year, but the termination of the Dutch offshore wind contract severely constrained its cash flow.

A Petrofac representative confirmed that “early-release notices were sent to employees whose roles were connected to the Dutch offshore wind programme,” adding, “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.”

Founded in Texas in 1981 and headquartered in the UAE since 1991, Petrofac grew into a major global oil and gas services provider with operations across the Middle East, North Africa and the North Sea. The company employs around 8,500 people across 30 offices worldwide. Petrofac has not clarified which jobs are at highest risk, though UAE reporting suggests unpaid dues could exceed Dh27 million ($7.35 million).

Petrofac was listed on the London Stock Exchange in 2005, but a bribery scandal involving employees in 2017 triggered a long decline. Mounting losses — $192 million in 2020, $245 million in 2021, $320 million in 2022 and $505 million in 2023 — and falling revenues culminated in its delisting after entering administration this year.

Despite the crisis, Petrofac remains involved in several major UAE energy projects. In June, Adnoc awarded the company an engineering, procurement and construction management contract for a $1.2 billion project to expand gas facilities on Das Island. In January, Adnoc Gas granted Petrofac a $330 million contract for a new gas compressor plant at the Habshan complex. In 2023, Petrofac also secured a $615 million contract to build one of the region’s largest carbon capture facilities.

An Adnoc Gas spokesman told The National that Petrofac Emirates “continued to deliver on its obligations,” adding, “There has been no impact on our projects to date. We maintain regular engagement with Petrofac Emirates and other stakeholders to safeguard project timelines and ensure continuity of delivery.”

A source familiar with the Habshan project, and a former Petrofac employee, said the work was already 60–70 percent complete.

However, industry analysts warn Petrofac’s collapse could have significant knock-on effects across the Gulf, with the UAE seen as most exposed.

Last month, the company submitted the lowest bid for a $1.4 billion water injection project for Kuwait Oil Company. A source familiar with Petrofac’s work in Saudi Arabia said its recent contract wins there could be reassigned to local companies, noting: “They were aggressive [in pricing] to win contracts.”

By Sabina Mammadli