Petrofac, a major energy services firm based in Aberdeen, Scotland, filed for administration on October 27, 2025, after a key offshore wind contract fell through. This move puts over 2000 jobs in the North Sea region at risk, sparking widespread concern about the future of the UK’s energy sector amid ongoing policy debates.
What Led to Petrofac’s Administration Filing
The company announced that its restructuring efforts collapsed when Dutch grid operator TenneT canceled a major 2GW offshore wind project contract last week. Petrofac, which designs and builds facilities for oil, gas, and renewable energy projects, has faced financial strain for years due to past issues like corruption probes and delayed payments.
Executives stressed that the administration applies only to the ultimate holding company, Petrofac Limited, with no employees directly tied to it. The firm’s UK operations, including its North Sea hub, will keep running as usual to minimize disruptions for clients and staff.
Petrofac employs about 7300 people worldwide, but the spotlight falls on Scotland where around 2000 workers support operations for giants like BP and Shell. Recent wins, such as a $50 million contract renewal with Ithaca Energy, show some resilience, yet the contract loss proved too much.
Experts point out that while policy changes play a role, Petrofac’s troubles stem from deeper problems. The firm paid a 70 million pound fine in 2021 for bribery cases in the Middle East, which hurt its reputation and bidding chances long before recent tax hikes.
Political Backlash Over North Sea Policies
Opposition leaders in Scotland wasted no time linking the news to government energy strategies. Scottish Conservative MP Andrew Bowie called it a “catastrophic” blow to the north-east economy, blaming Labour’s higher windfall tax and ban on new oil and gas licenses for driving away investment.
Bowie urged both Labour and the SNP to back the sector fully, warning that thousands of jobs hang in the balance. He highlighted how firms like Harbour Energy and Repsol have already cut staff, painting a grim picture of job losses tied to what he sees as hostile policies.
SNP figures echoed the worry but pointed fingers at Westminster. First Minister John Swinney described the situation as “incredibly concerning” for workers and families, calling on the UK government to rethink the 78 percent Energy Profits Levy. SNP MSP Kevin Stewart added that Scotland’s energy riches should fuel growth, not risk it through high taxes and unkept promises on green energy.
The UK government pushed back, insisting Petrofac’s issues predate their policies. Officials noted support for carbon capture projects and massive offshore wind investments in the North Sea to create new opportunities.
- Key political reactions include:
- Andrew Bowie (Conservatives): “Devastating for jobs; reverse the tax now.”
- John Swinney (SNP): “Urgent rethink needed on levy to protect workers.”
- Liberal Democrats: Deny policies are causing sector suffering, focus on transition to renewables.
This debate heats up as the energy transition gains pace, with calls for a balanced approach that safeguards current jobs while building green ones.
Job Impacts and Economic Ripple Effects
The immediate fear centers on the 2000 Scottish jobs, mostly in Aberdeen, the heart of North Sea operations. Workers there handle engineering, project management, and logistics for offshore platforms, roles that support families and local businesses.
Administration could lead to uncertainty, but company leaders assure minimal short-term changes. Still, industry watchers like Alan Stewart from MHA in Aberdeen warn of broader distress. He called it a “stark warning” from the North Sea, where fiscal uncertainty and poor project visibility hit the supply chain hard.
Recent data shows the sector losing about 1000 direct and indirect jobs monthly. This fits a pattern: Grangemouth refinery’s troubles earlier this year echoed similar fears, with workers facing a rocky “just transition” to renewables that has not materialized as promised.
Communities feel the pinch too. Aberdeen’s skyline, dotted with energy firms, risks more empty offices if investment flees. Local leaders stress the need for quick support, like retraining programs, to help those affected pivot to emerging fields like offshore wind maintenance.
| Key Economic Impacts | Details |
|---|---|
| Jobs at Risk | Over 2000 in Scotland, plus indirect supply chain roles |
| Monthly Sector Losses | Around 1000 jobs across UK North Sea operations |
| Recent Company Actions | $50M contract with Ithaca Energy; exploring M&A options |
| Broader Effects | Pressure on Aberdeen economy; calls for government aid |
These figures underscore the urgency, as the North Sea has long been Scotland’s economic backbone, contributing billions annually.
Challenges Facing the North Sea Energy Sector
Petrofac’s woes highlight deeper troubles in the North Sea. The region, once a global oil powerhouse, now grapples with aging fields, high costs, and a shift to low-carbon energy. Labour’s plans to block new exploration licenses aim to cut emissions but draw fire for ignoring energy security.
Past scandals, like Petrofac’s bribery fines, add layers of complexity. The firm got banned from Middle East bids for two years and lost a 4 billion dollar Thai project, piling on debts before the windfall tax even started in 2022.
On social media and forums, opinions split. Some users blame “net zero stupidity” for killing jobs, while others note mismanagement and global competition in renewables. Videos online discuss how this could slow the UK’s green push if firms like Petrofac falter.
Yet, positives exist. The government touts record investments in offshore wind and carbon capture, potentially creating 100,000 jobs by 2030. The key lies in bridging the gap, ensuring oil workers transition smoothly without leaving communities behind.
Looking Ahead: Restructuring and Recovery Options
Petrofac now works with administrators from Teneo to explore paths forward, including mergers or asset sales. The board held emergency talks over the weekend, aiming for the best outcome for strong business units.
Optimism lingers for the UK arm, with executives like Sami Shanks affirming a “viable long-term future.” The North Sea operations remain active, serving clients without interruption.
For Scotland, this serves as a wake-up call. Policymakers must balance climate goals with economic needs, perhaps by tweaking the levy or boosting transition funds. As one former employee put it, the sector needs clear vision to thrive amid change.
Readers, what do you think about the balance between green energy and protecting jobs? Share your views in the comments below and spread the word by sharing this article to keep the conversation going.
