Oilfield contractor Petrofac has fallen to a heavy half-year loss after counting the cost of its delayed gas plant on Shetland.
The firm was due to complete the Laggan-Tormore project for French energy major Total last month, but now expects the scheme to be finished during the final quarter of this year.
As a result of bringing in more subcontractors in effort to get the plant finished, Petrofac said it had racked up a loss of about $263 million (£167m) on Laggan-Tormore during the six months to the end of June.
As a result, the firm – which employs about 5,000 people in Aberdeen – slumped to a $133m net loss for the first half, compared with a $135m profit for the same period last year, despite revenues jumping 25 per cent to almost $3.2 billion.
Petrofac, headed by chief executive Ayman Asfari, said: “Operationally, on the Laggan-Tormore gas plant, commissioning is well under way, with major systems handed over to the client. The additional costs predominantly relate to additional direct construction man hours, along with the associated indirect, subcontractor and material costs. The rest of our portfolio remains in good shape and is performing in line with our expectations.”
However, the group warned investors that the delay in commissioning the Shetland gas plant could trigger a claim for damages from Total, which last month sold a 20 per cent stake in the project, along with interests in the Laggan, Tormore, Edradour and Glenlivet fields, to Perth-based SSE for £565m.
SSE also plans to invest about £350m over the next three years to complete the development of the plant and gas fields.
Petrofac said: “The group is working in collaboration with Total as we commission the plant and we currently anticipate completion in the fourth quarter. Management believes that liquidated damages are not likely to be claimed in the event that our revised completion schedule is achieved and the gas plant is successfully handed over in line with our client’s expectation.
“Further delays to completion of the contract would increase the risk of a claim arising.”