On October 27, 2025, Petrofac, one of the world’s leading energy services providers and a major operator in the North Sea oil and gas sector, filed for administration—a move that has sent shockwaves through the energy industry and raised deep concerns for thousands of workers and the UK government alike. The company, which employs about 7,300 people globally and approximately 2,000 in Scotland alone, announced that the administration process would apply only to its ultimate holding company, with day-to-day operations in the North Sea and across the UK continuing as normal, at least for now.
The decision to seek administration came after Dutch grid operator TenneT abruptly terminated a major offshore wind contract with Petrofac. This contract, crucial to the company’s financial health, had represented more than 80% of revenue in Petrofac’s engineering and construction division, according to court documents cited by Bloomberg. The loss of this project, which involved building offshore wind facilities off the Dutch coast, effectively derailed advanced financial restructuring plans that had been in the works for over a year.
In a statement reported by BBC, Petrofac explained, “Petrofac has a number of fundamentally strong businesses and we are focused on delivering the best possible outcome for them through this process. Our long-established North Sea business continues to operate as normal, and management are working to minimise disruption for clients and employees.”
Founded in Texas in 1981, Petrofac quickly grew into a global player, designing and constructing facilities for oil, gas, and renewable energy projects. The company has worked with major industry names such as BP and Shell on North Sea oil platforms and has provided engineering, project management, and logistics services for decades. At its peak in 2012, Petrofac was a FTSE 100 company valued at around £6 billion. But the last decade has seen a dramatic reversal of fortunes.
Petrofac’s troubles began in earnest with a Serious Fraud Office (SFO) investigation in 2017, which ultimately led to a conviction in 2021 for failing to prevent bribery and more than $100 million in penalties. The fallout from the probe made it increasingly difficult for the company to win new contracts, particularly in the Middle East, and the onset of the coronavirus pandemic only compounded its woes. Despite a brief recovery, the company has been struggling to restructure its finances, with debts reportedly approaching $4 billion (£3 billion) as of July 2025, according to court judgments cited by The Guardian.
By May 2025, Petrofac’s shares were suspended from trading on the London Stock Exchange after the company failed to publish its 2024 results. Its market value had plummeted to just £20 million—a staggering fall from its former heights. The company cited delayed contract payments and rising operating costs as key factors in its financial decline.
The administration filing has triggered a wave of concern across the UK’s energy sector. The Aberdeen and Grampian Chamber of Commerce (AGCC) described the news as “deeply concerning,” emphasizing that “thousands of skilled jobs across the region depend on companies like Petrofac, which sit at the heart of both our oil and gas and energy transition sectors.” Chief executive Russell Borthwick told BBC, “While many of Petrofac’s challenges predate the current government, this is another stark reminder that the UK government must urgently act to restore confidence and stability in the energy industry.”
Scottish Conservative energy spokesman Douglas Lumsden was even more direct, asserting that oil and gas workers had been “abandoned” by both the UK and Scottish governments. Scotland’s First Minister John Swinney echoed the sentiment, calling the announcement “incredibly concerning” and urging the UK government to “urgently revisit” the 78% windfall tax on North Sea oil and gas profits—a tax that has been fiercely debated in political circles and criticized by some business leaders and even former US President Donald Trump, who claimed in September that high taxes had caused the UK to lose its “powerful edge” in the North Sea.
In response to these concerns, a spokesperson for the UK Department of Energy Security and Net Zero assured the public that “the UK arm of Petrofac has not entered administration and is continuing to operate as normal, as an in-demand business with a highly skilled workforce and many successful contracts.” The spokesperson attributed the administration to “long-standing issues” in Petrofac’s worldwide operations and pledged, “The government will continue to work with the UK company as it focuses on its long-term future.” Energy Secretary Ed Miliband’s department has been leading efforts across “all parts of government” to support Petrofac’s UK operations, as reported by The Guardian.
Petrofac’s management, for their part, remain in talks with key creditors, including an ad hoc group of noteholders who have agreed to continued forbearance arrangements while alternative restructuring and M&A solutions are explored. The company also retains the support of its revolving-credit facility and term loan lenders, who are extending debt maturities on a rolling basis. Just last month, Petrofac renewed a two-year contract with Ithaca Energy in the UK North Sea valued at $50 million, highlighting the ongoing viability of parts of its business.
Yet, the uncertainty surrounding Petrofac’s future casts a long shadow over the broader energy sector. The Labour government’s manifesto pledge not to grant new oil and gas licenses for the North Sea has already sparked heated debate about the balance between climate action, energy security, and job protection. As the government consults on legislation to set out its plans, business leaders and politicians from across the spectrum are calling for urgent action to stabilize the industry and safeguard skilled jobs.
Meanwhile, the administration process itself is expected to be carried out by business services firm Teneo, with a focus on preserving value, operational capability, and ongoing service delivery. The company has emphasized that the process is “targeted” and applies only to the holding company, aiming to minimize disruption for employees and clients. Still, the fate of Petrofac’s operations in regions like the Middle East—already hit hard by contract losses—remains uncertain.
For now, Petrofac’s North Sea business continues to operate, and the government is working closely with the company to chart a long-term path forward. But the collapse of this once-mighty firm serves as a stark reminder of the volatility of the energy sector—and the complex interplay of global business risks, government policy, and the urgent need for a just transition in the face of climate change.
The coming months will be critical, not just for Petrofac’s employees and creditors, but for the entire North Sea supply chain and the communities that depend on it. All eyes are now on Westminster and Holyrood to see whether decisive action will be taken to restore confidence and chart a new course for the UK’s energy future.
