The UK-based engineering and construction group Petrofac is undergoing a significant financial and operational crisis, marked by impending administration proceedings and a strategic pursuit of mergers and acquisitions for its core divisions. The executive management is collaborating with the administrators of the group's ultimate holding company, Petrofac Limited, which is already in administration, to preserve value and operational continuity across its entities.

Administration Proceedings for Key Subsidiary

Petrofac International Limited (PIL), a subsidiary historically focused on engineering and construction activities in the Middle East and North Africa, is set to enter administration. PIL holds no ongoing contracts, and the group plans to redeploy its 120 staff to other group companies. A formal application will be made to the Royal Court of Jersey, seeking a letter of request to the High Court of England and Wales to appoint administrators to PIL, with a hearing scheduled for 28 November 2025. This step is intended to support the broader administration process of Petrofac Limited and facilitate planned M&A solutions.

Contract Terminations and Restructuring Collapse

The company's financial instability has been exacerbated by major contract cancellations. Orlen Lithuania, part of Poland’s Orlen Group, terminated a nearly 1 billion euro refinery upgrade contract due to delays and concerns over Petrofac's delivery capabilities. Additionally, a proposed restructuring plan collapsed last month after TenneT terminated its workscope on a 2-gigawatt offshore wind programme, leading Petrofac to file for administration.

Workforce Reductions and Future Optimisation

In response to these setbacks, Petrofac has implemented significant layoffs, affecting hundreds of employees in the United Arab Emirates, India, and other key markets. The job cuts included project directors, senior engineers, and support staff associated with the cancelled offshore wind transmission programme. Sources indicate that further workforce reductions are likely, with existing business units potentially being optimised by up to 20% as part of the ongoing administration process.

Ongoing Financial and Strategic Efforts

Petrofac continues to advance options for alternative restructuring and M&A solutions with key creditors, aiming to address its high debt levels and secure new funding. The administration of PIL and the broader group is viewed as a mechanism to preserve the value of the wider organisation and enable these strategic transactions.