Will Thousands of Jobs Be Saved at the Oil and Gas Firm?

Thousands of jobs are expected to be preserved as American company CB&I has successfully acquired part of Petrofac, an energy services firm that recently entered administration. The deal, which involves Petrofac's asset solutions business, is set to be finalised in the first quarter of 2026, ensuring continued employment for the firm's 3,000 UK employees, particularly the 2,000 based in Aberdeen.

Last updated: 26 October 2023 (BST)

What’s happening now

In a significant development for the UK energy sector, CB&I's acquisition of Petrofac's asset solutions business signals a promising turn for the beleaguered firm. After entering administration in October 2023 due to a collapse in a key renewables contract in the Netherlands and broader financial challenges, the acquisition offers hope for job security for thousands of employees. The deal is viewed as a positive step towards stabilising Petrofac's operations and rebuilding its reputation in the industry.

Key takeaways

CB&I has acquired Petrofac's asset solutions business, protecting approximately 3,000 jobs in the UK.
The deal comes after Petrofac entered administration in October 2023 following financial difficulties.
Petrofac's peak market value was around £6 billion in 2012; it has since faced numerous challenges.

Timeline: how we got here

Understanding the timeline leading to this acquisition is crucial for grasping the broader context of Petrofac's challenges:

October 2023: Petrofac enters administration following the collapse of a major renewables contract and a series of profit warnings.
November 2023: CB&I announces its intention to acquire Petrofac's asset solutions business with the completion expected in Q1 2026.

What’s new vs what’s known

New today/this week

The announcement of CB&I's acquisition marks a pivotal moment for Petrofac, as it not only safeguards existing jobs but also signals confidence in the company's asset solutions business. This move is expected to enhance operational capabilities and potentially lead to new contracts in the energy sector.

What was already established

Prior to this acquisition, Petrofac was grappling with significant financial difficulties, including a Serious Fraud Office investigation and a decline in its market position. The company, once a prominent player in the FTSE 100 with a peak value of £6 billion in 2012, has faced multiple setbacks, including the loss of key contracts and profitability issues.

Impact for the UK

Consumers and households

The acquisition is expected to have a stabilising effect on local economies, particularly in Aberdeen, where approximately 2,000 employees are based. As Petrofac continues its operations under new ownership, consumers may experience fewer disruptions in energy services, especially related to oil and gas supplies.

Businesses and jobs

For the business community, the deal is a positive signal of recovery within the energy sector. It may lead to increased investments and partnerships, not just for Petrofac but for other firms in the supply chain. The commitment to job security also contributes to workforce stability in a sector that has seen significant volatility.

Policy and regulation

This acquisition could lead to discussions around regulatory compliance and oversight within the energy sector, especially in light of Petrofac's past investigations. CB&I's entry into the UK market may also prompt regulatory reviews to ensure that safety and operational standards are upheld in line with UK regulations.

Numbers that matter

3,000: Total number of employees at Petrofac in the UK.
2,000: Number of employees based in Aberdeen.
£6 billion: Petrofac's peak market value in 2012.
1981: The year CB&I was founded in Texas.
2023: The year Petrofac entered administration.

Definitions and jargon buster

Administration: A legal process where a company is insolvent and is managed by administrators to pay off debts.
Asset Solutions Business: A division focused on providing operational support and services for energy projects.
FTSE 100: An index of the 100 largest companies listed on the London Stock Exchange.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, employees and stakeholders should remain informed about the transition process as CB&I finalises its acquisition. There may be announcements concerning operational changes or new contracts that could shape the business landscape.

Medium term (1–6 months)

Over the next six months, watch for developments regarding new contracts that may arise from the acquisition. This period may also see a reassessment of Petrofac's operational strategies under new ownership.

Signals to watch

Updates on the completion of the acquisition.
New contracts or partnerships announced by Petrofac or CB&I.
Industry reactions to the acquisition in terms of investor confidence and market stability.

Practical guidance

Do

Stay informed about developments regarding the acquisition and its implications for the energy sector.
Monitor job announcements and opportunities within the new organisational structure.

Don’t

Assume immediate changes in job roles or company operations; allow the transition period to clarify any uncertainties.
Neglect industry news that may affect your position or interests within the energy sector.

Checklist

Ensure you understand your rights as an employee during the transition.
Follow updates from Petrofac and CB&I for real-time information.
Engage with industry forums for insights and networking opportunities.
Review your professional development options in light of potential changes in the company.

Risks, caveats, and uncertainties

While the acquisition presents a positive outlook, uncertainties remain surrounding the operational integration of the two companies. Additionally, the historical challenges faced by Petrofac raise questions about its future performance. The industry may also face external pressures, such as fluctuating oil prices and regulatory changes, which could impact overall stability.

Bottom line

The acquisition of Petrofac's asset solutions business by CB&I is a significant development that promises to secure jobs and stabilise operations within the UK energy sector. As the transaction unfolds, stakeholders should remain vigilant and prepared for the potential changes that may arise, ensuring they adapt to the evolving landscape.

FAQs

What does the acquisition mean for Petrofac employees?

The acquisition by CB&I is expected to safeguard approximately 3,000 jobs at Petrofac, providing stability and potential growth opportunities for employees in the UK.

When will the deal be finalised?

The deal is set to be completed in the first quarter of 2026, marking a significant step in securing the future of Petrofac's asset solutions business.

Why did Petrofac enter administration?

Petrofac entered administration due to a collapse in a major renewables contract and a series of profit warnings that highlighted its financial struggles.