CB&I takeover of UK arm rescues 3,000 roles and helps Ed Miliband’s net zero goals
Around 3,000 UK jobs have been saved after a US rival bought Petrofac’s North Sea operations.
In a rescue deal announced on Christmas Eve, Texas-based Chicago Bridge & Iron Company (CB&I) has taken over Petrofac’s Aberdeen-based engineering and operations arm.
It comes after the business was plunged into uncertainty this year when the Petrofac holding company entered administration.
This stemmed from financial challenges across its global operations, as its UK arm was deemed profitable.
Petrofac’s North Sea division manages platforms for oil and gas giants such as BP, Shell, Ithaca and EnQuest. It is also responsible for building and maintaining a series of UK wind farms.
The threat of collapse had alarmed Government officials owing to its importance to both the North Sea oil and gas industry and Ed Miliband’s net zero ambitions.
Announcing the deal on Wednesday, Tareq Kawash, the chief executive of Petrofac, said: “This is a great outcome for the Petrofac Asset Solutions business, supporting job security for 3,000 talented team members.”
CB&I is a leading global designer and builder of storage facilities, tanks, and terminals for the energy industry.
Following the agreement, Mark Butts, the company’s chief executive, said: “Our organisations share similar management philosophies and industry-leading safety performance.
“We see clear opportunities to enhance performance and deliver stable cash flow generation. These factors collectively support CB&I’s long-term growth objectives.”
Exact details of the deal are not yet known. Still, it is understood that CB&I will not assume any of Petrofac’s debts, which were previously estimated at $707.9m (£560m).
Petrofac’s recent challenges
Petrofac was founded in Texas 44 years ago and later expanded to the UK, establishing an engineering centre in Woking and an operational base in Aberdeen.
It floated on the London Stock Exchange in 2005, offering training, engineering services, and the operation of entire platforms for a series of North Sea producers.
However, it has been challenged by several issues in recent years.
The company’s Gulf division was caught up in a corruption scandal in the 2010s, resulting in a £77m fine following an investigation by the Serious Fraud Office.
It was then hit by the pandemic, which caused construction delays, disrupted cash flow and forced Petrofac to halt debt repayments.
Its problems intensified earlier this year after a long-running restructuring deal collapsed after a major customer cancelled a lucrative contract.
Petrofac Limited, the holding company, appointed administrators soon after.
James Bennett, of Teneo, Petrofac’s administrator, said: “This is a very positive outcome and secures the future of its operations and the roles of many highly skilled people.”
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