North Sea energy transition2 May 2023 10:27
A growing pipeline of work in new energies will help Petrofac shrug off last year’s losses but more supply chain collaboration is vital.
Last week the London-listed services giant (LON:PFC) said it had been “severely impacted” by challenges in its engineering and construction (E&C) division, leading to losses of over $300m for the year.
Revenues too dipped to just under $2.6bn, compared to over $3bn the year before.
Petrofac chief operating officer for new energy services John Pearson confirmed the filings had showed “a disappointing set of results” but maintained the challenges related only to “legacy contracts” that were now addressed.
“Underneath that I think there’s lots of positives. The market is very positive as far forward as I can see. Our asset solutions business, which employs the vast majority folk in the UK, had a really, really good year.”
Indeed, Mr Pearson’s new energies arm – which tackles everything from offshore wind to biofuels – appears to be going from strength to strength, with work now comprising some 25% of Petrofac’s global pipeline.
In particular, a headline-grabbing £11bn award to help build offshore substations for European transmission system operator TenneT – the largest deal of its kind in Petrofac’s history – shows there are plenty of opportunities for growth.
UK at ‘core’ of E&C
Despite legacy challenges, Mr Pearson said both E&C and asset solutions were performing well in the North Sea.
The UK remains Petrofac’s largest market by some margin, responsible for some 26% of group revenue last year (the next largest being Algeria at 15%).
Here he says the group is focusing on what it does best; its asset solutions business has around 40% of the North Sea market, making for “a really strong base and a fantastic place to do things right and properly.”
“We’re focusing on maintaining that core in the UK and then taking those skills and following our customers around the world to deploy them wherever they are.”
Increasingly, this is geared towards late-life management of assets, helping guide them either towards decommissioning or potential re-use.
“We’re finding lots of operators are looking at repurposing facilities. They’re looking for a contractor – and there aren’t that many like Petrofac – who’ve got proven duty ownership capabilities, who know about wells management, who know about pipelines, and who can also do the kind of capital projects bit and brownfields, around how you repurpose those assets.
“We’re very positive about how that business will pan out and we’re already seeing contract awards in that area in different geographies, which is really good.”
‘Design one, build many’
The advent of new energies work is also bringing about new contracting frameworks.
The TenneT award – delivered in partnership between Petrofac and Hitachi Energy – covers six projects, each comprising the EPCI of an offshore HVDC transmission station, onshore converter station and associated infrastr
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