Shetland contract win boosts oil services giant

Jun 20, 2015 12:00 AM

PETROFAC, the oil services giant which has made hefty losses on a big project in Shetland, has won a lucrative contract to work on production platforms off the islands.

The company has been contracted to provide operations and maintenance support for three platforms East of Shetland for CNR International under a five year deal covering the Canadian firm's NorthSea assets.

Jersey-registered Petrofac said the renewal contract with CNR is the largest in a basket of such deals announced yesterday.

The renewals are worth a total of around $400 million (£250m). Some 600 people work on the contracts.

The wins will provide a boost for Petrofac after the difficulties it has faced building the Laggan-Tormore gas plant on Shetland. The company is facing losses of more than £250m on the project to build the plant, which will handle output from Total's giant Laggan- Tormore development.

The wins also highlight the continued value of business to be won in areas like the North Sea in spite of the oil price plunge.

Walter Thain, Managing Director, Petrofac Offshore Projects & Operations said the package was great news for the business, at a challenging time for the industry. Firms that own oil and gas fields are looking to squeeze costs out of the supply chain.

Mr Thain noted: "In the current climate, more than ever, it is vital that operators can have confidence in the supply chain to continue to generate value for them."

The package includes a two year deal from Eni of Italy to work on facilities in the East Irish Sea and the Point of Ayr gas terminal in North Wales.

In June Petrofac won a $45m contract from Oranje-Nassau Energie to work on the Sean field asset in the North Sea which the Dutch firm acquired from Shell and ExxonMobil.

In April Petrofac said it expected to record a further loss of around £130m on work on the Laggan-Tormore gas plant, citing problems including bad weather and low labour productivity.

In February Petrofac disclosed it had lost around £150m in 2014 on the contract to build the terminal.

The plant is Petrofac's first big onshore construction project in UK.

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