Petrofac will also furlough some of its employees in anticipation of a reduction in activity levels amid the coronavirus pandemic and low oil prices
Hundreds of jobs are set to go at Petrofac with the company planning to lay off nearly 20% of its workforce in response to the adverse conditions affecting the oil and gas industry.
The Jersey-based oilfield services provider will also furlough some of its employees in anticipation of a reduction in activity levels amid the coronavirus pandemic and low oil prices.
The company said that it is implementing some decisive actions owing to the unprecedented disruption with an objective to boost its cost competitiveness and safeguard the long-term health of its business.
Through multiple cost-cutting measures, the oilfield services company expects to bring down its overhead and project support costs by at least $100m in the current year and by up to $200m in 2021. Included in these are salary cuts for its management and other employees.
Petrofac said that the prevailing economic uncertainty has driven its management to take measures to preserve cash and liquidity. As part of this, the company will reduce its capital expenditure by 40% or $60m in 2020.
The company said that its engineering and construction activities are going on at most of its engineering and construction (E&C) project sites and offices. However, their progress is being affected by disruptions in the supply chain, restrictions on travel, and government-enforced lockdowns in India and Iraq.
Petrofac group chief executive comments on the COVID-19 measures
Petrofac group chief executive Ayman Asfari said: “We have a resilient business model, strong competitive position and a differentiated in-country value proposition that is highly valued by our clients.
“Nevertheless, we are taking swift, decisive action in response to the COVID-19 pandemic and lower oil prices to reduce costs, retain our competitiveness and preserve the strength of our balance sheet. These best position us to protect our business, stakeholders and the communities we serve.”
In February 2020, the oilfield services provider won two contracts worth about $1.65bn in the UAE from Abu Dhabi National Oil Company (ADNOC) for the Abu Dhabi mega project.