Financially beleaguered engineering and construction company Petrofac has initiated significant layoffs across its global operations, particularly in the United Arab Emirates, India, and Europe. This workforce reduction follows the collapse of a major restructuring plan and the termination of a landmark contract, leading the company to enter an administration process.

Widespread Layoffs and Employee Impact

In the UAE alone, between 150 and 200 employees have been laid off, primarily from the energy transition projects (ETP) business segment. The job losses were described as abrupt, with employees given only a day's notice. There is significant uncertainty surrounding the payment of gratuity and other end-of-service benefits, as required by UAE law. Reports indicate that the total unpaid gratuity could exceed 27 million dirhams ($7.352 million). The affected personnel include project directors, senior engineers, and support staff who were linked to a now-terminated 2-gigawatt offshore wind transmission programme in Europe. Laid-off staff have been informed that Petrofac will communicate with them regarding their final dues within the legally required period.

Restructuring Collapse and Business Reorganization

The layoffs are a direct consequence of the recent collapse of Petrofac's proposed restructuring plan. This plan failed after TenneT terminated Petrofac's workscope on the 2-gigawatt offshore wind programme. Following this, the UK-based contractor filed for a "targeted administration" of its ultimate holding company. As part of its response, Petrofac has merged its ETP business with two other existing units: engineering & construction and asset solutions. This merger and the associated job cuts are being driven by the ongoing administration process in the UK.

Global Scope and Future Reductions

The job cuts extend beyond the UAE. Sources report that more than 100 positions have likely been eliminated in the Indian market, with additional layoffs occurring in Europe. Furthermore, one source has warned of further job cuts, suggesting that the existing business units could be optimized by up to 20% as the administration process continues, leading to a substantially lower headcount.

Company Statements and Project Outlook

In response to inquiries, Petrofac stated that operations across its UAE project portfolio are continuing as normal. The company emphasized it is focused on preserving value and operational capability while exploring options for the long-term future of its operating entities. It confirmed that early-release notices were issued to colleagues whose roles were connected to the terminated TenneT offshore wind programme and acknowledged the challenging time for its employees. Regarding its project portfolio, a top official at Adnoc Gas stated that Petrofac's ongoing projects with the Abu Dhabi state-owned company are unlikely to be impacted by the contractor's financial troubles and administration plans. However, other industry sources have cautioned that the administration process is likely to impact ongoing projects in the Middle East. The company has struggled in recent years to secure new funding and manage its high debt levels.