Petrofac has announced the cancellation of two contracts with the Abu Dhabi National Oil Company (ADNOC), jointly worth $1.5bn. The work was awarded only two months ago.

Subsidiary company Petrofac Emirates would have carried out work on the Dalma Gas Development project offshore Abu Dhabi, UAE. The development is operated and 60% owned by ADNOC. Eni owns a 25% stake, with Wintershall taking 10%, and OMV owning 5%.

The project was awarded in two packages and included constructing a gas processing facility on an island in the Persian Gulf over the next three years.

Engineering, construction and installation work on four platforms nearby was to be carried out jointly by Petrofac and Sapura Energy .

In a statement, a company spokesperson said: “Petrofac is committed to working with ADNOC over the coming weeks to explore alternative options to deliver this project in a way that supports their strategic objectives within the current challenging environment.”

While not specifically stated, the “challenging environment” likely refers to the Covid-19 pandemic in light of which both companies are making cost savings. Last week Petrofac announced it would reduce staff numbers in the UAE by 20%. The company is asking staff to leave their jobs, fin return for benefits, before the end of this week. As a whole, the company is also cutting 25% of costs, as well as cutting the pay of board members.

Petrofac’s statement said it was working through its $7bn backlog and is tendering for other projects in Abu Dhabi.