Oil services heavyweight highlights importance of its North Sea business

OIL services heavyweight Petrofac has underlined the value of its North Sea business after plunging deep into the red amid the fallout from the coronavirus crisis.

The company, which it is thought employs around 900 people in Aberdeen and 2,000 offshore, made a net loss of $180 million in 2020, after making $73m profit in the preceding year.

Revenues fell by around 25 per cent to $4.1bn, from $5.5bn.

Petrofac noted that its order backlog fell by 32% at December 31 as clients cut spending on new facilities in response to the Covid-19 pandemic and the related fall in oil prices.

While prices have risen since November amid the rollout of coronavirus vaccines, Petrofac said market conditions remains challenging.

“Clients are continuing to adopt tough commercial positions and delays in awards remain a risk,” it noted.

The company said the biggest new award won by its engineering and construction division was for work on the giant Seagreen windfarm that SSE is developing off the Angus Coast.

The division that helps firms operate and maintain existing North Sea assets increased UK revenues last year, to $534m from $531m.

Petrofac won work from established North Sea players such as Ithaca Energy, and from new entrants, such as private equitybacked NEO Energy. It also won a contract to provide support services on the Acorn carbon capture and storage project in Aberdeenshire.

However, Petrofac’s challenges have been compounded by the problems it has faced in the core UAE market in recent months.

In March Petrofac said it had been suspended from bidding for new awards by state-owned ADNOC after a former employee pled guilty to offences under the Bribery Act in connection with historic contract awards in Saudi Arabia, Iraq and the UAE in the period 2012 to 2015.

Petrofac said it is engaging with a Serious Fraud Office investigation into the group. It added: “No charges have been brought against any Group company or any other officers or employees.”

The results were the first announced by Petrofac since Sami Iskander succeeded Ayman Asfari as chief executive in January.

Mr Iskander said the company aimed to capitalise on the recovery in addressable markets, to diversify into new geographies and to accelerate its pivot to new energies.