UK’s Petrofac collapse clouds multi-billion-dollar projects in UAE, GCC

Dubai: The collapse of UK-based energy contractor Petrofac has raised questions over the future of several major oil and gas projects in the Gulf region, including multi-billion-dollar developments in the UAE, where the firm remains an active player in the energy sector.

Petrofac, which employs about 7,300 people globally, filed to enter administration this week after last-ditch efforts to restructure its debt failed. The company’s financial troubles intensified following the termination of a major offshore contract with European grid operator TenneT, which had formed the backbone of its recovery plan.

According to filings, the TenneT contract accounted for more than 80% of revenue in Petrofac’s engineering and construction division. The loss of that work left the firm unable to sustain its capital structure.

In a statement, Petrofac said it continues to receive support from its lenders and bondholders, who are extending debt maturities and maintaining forbearance agreements while options for restructuring and mergers are still being explored.

“Petrofac has a number of fundamentally strong businesses, and we are focused on delivering the best possible outcome for them through this process,” a company spokesperson said. “Our long-established North Sea business continues to operate as normal, and management are working to minimise disruption for clients and employees.”

A representative from the UK Department for Energy Security and Net Zero said the company’s administration was the result of “longstanding issues in their global business,” adding that Petrofac’s UK operations would continue as normal.

Petrofac’s most significant contracts in the Gulf are concentrated in the UAE, where it has been involved in several large-scale energy infrastructure projects. These include a $1.2 billion gas expansion project and a $330 million gas compressor facility—both key parts of the country’s wider efforts to expand gas production capacity.

Industry observers say the company’s entry into administration could prompt reviews of project schedules and supplier commitments, though no formal changes have been announced.

Across the wider GCC, Petrofac holds active contracts worth more than $5 billion, including projects in Algeria, Iraq, Oman, and Bahrain. In Algeria, it is working with a Chinese partner on a major petrochemical complex, while in Iraq it has been involved in the long-running expansion of the Majnoon oil field, one of the country’s largest.

Analysts note that Petrofac’s financial situation may lead to temporary disruptions in bidding or delivery timelines, particularly where the company acts as a lead contractor or joint venture partner.

“Petrofac’s situation is unfortunate, but the energy market is far bigger to be hit by any single contractor,” said a regional analyst. “Abu Dhabi’s projects are structured to stay on schedule, and even when global contractors face turbulence, UAE projects continue without interruption.”

Petrofac’s difficulties trace back several years. In 2017, the company faced a UK Serious Fraud Office investigation that resulted in a large fine and damaged its ability to secure new contracts in the Middle East.

Earlier this year, Petrofac sought to execute a debt-for-equity restructuring supported by hedge funds Mason Capital and Nut Tree Capital, which would have converted over $800 million in debt into shares. But a UK Court of Appeal ruling in July blocked the plan, forcing the firm to seek alternative solutions.

Despite entering administration, Petrofac maintains that parts of its business remain commercially sound. Advisory firm Teneo has been appointed to oversee the process, which could involve asset sales or the transfer of active projects to new contractors.

Petrofac’s collapse comes at a time when energy investment in the GCC remains strong, with several major oil and gas expansions underway. The company has been an important engineering partner on multiple regional projects, including contracts awarded by Adnoc Gas in the UAE.

While short-term uncertainty may arise, analysts say the impact on regional project pipelines is expected to be limited, given the depth of local and international participation in ongoing developments.

Petrofac’s administration marks the latest in a series of financial challenges for UK infrastructure firms, but regional industry observers remain confident that key Gulf energy projects will move forward with minimal disruption.

- With inputs from Agencies