In a trading update

Oilfield services provider Petrofac has said that trading and awards are materially impacted by the Covid-19 pandemic and subsequent collapse of oil prices.

In a trading update, the company also said that it is on track to reduce expenses by $125m this year and up to $200m in 2021.

The company warned that its engineering and construction (E&C) division was significantly hit by the current market conditions due to weak oil prices.

According to Petrofac, revenue at its E&C division for the first half of this year is expected to fall to $1.6bn compared to last year.

Petrofac Group chief executive Ayman Asfari said: “Nevertheless, despite all of our efforts, the Covid-19 pandemic and sharp fall in oil prices have materially impacted financial performance and new orders in the first half of the year.

“In these unprecedented times, we are doing everything within our control to protect the long-term health of the business. We have taken swift, decisive action to structurally reduce costs, preserve cash and maintain our competitiveness. In doing so, we have preserved core capability whilst continuing to invest in digitalisation and our client relationships. Looking ahead, it is unclear how long market conditions will continue to disrupt business activity and delay awards.

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“Notwithstanding this, we have a tendering pipeline of $48bn of opportunities scheduled for award by the end of 2021 and an order book that gives us good near-term revenue visibility.”

Last week, Petrofac’s Engineering & Production Services (EPS) division secured a contract from Bahrain-based firm Tatweer Petroleum.

In April this year, Petrofac announced plans to reduce overhead and project support costs by at least $100m this year and by up to $200m next year.

In February, Petrofac’s Engineering & Production Services (EPS) division secured a contract from Sharjah National Oil Corporation (SNOC) for a project in the United Arab Emirates (UAE).