More than 2,000 North Sea jobs have been safeguarded after HM Revenue & Customs agreed not to pursue further legal action against a restructuring deal involving Petrofac, clearing the way for the sale of its UK business to US engineering firm CB&I.
The move removes a major barrier that threatened to derail the transaction and push Petrofac’s North Sea operations into insolvency, with potentially severe consequences for workers, supply chains, and the wider energy infrastructure.
HMRC had sought to recover over £150 million from Petrofac in a long-standing tax dispute. The agency argued that the company’s proposed debt restructuring was unfair, as it would leave HMRC with just £3 million while other creditors recovered a larger share. Scotland’s Court of Session rejected the challenge earlier this month, and HMRC confirmed it will not appeal the ruling.
The resolution clears the way for the rescue deal, which requires substantial debt write-offs across the group. Petrofac had warned that without a swift settlement, its UK asset solutions division—employing around 2,250 staff and operating 20 North Sea platforms—risked running out of cash and collapsing. Such a collapse could have prompted emergency measures to maintain offshore operations, potentially fragmenting the business and causing widespread job losses.
Petrofac, once a FTSE 100 company, employs roughly 8,000 people worldwide and has faced mounting pressure in recent years from legal challenges, project delays, and financial strain. The asset solutions division continued operating after Petrofac entered administration in October, and a deal to sell the business to CB&I was agreed in December. The transaction is viewed as a lifeline for operations and employment while providing a stable long-term owner.
Petrofac said it is now focused on completing the sale “as soon as possible,” describing CB&I as “an excellent fit” offering a positive outcome for both the company and its workforce.
In his judgment, Lord Sandison criticised HMRC’s handling of the case, noting delays in pursuing the tax claim, which dates back to alleged avoidance issues between 1999 and 2014—claims denied by Petrofac. The liability was not formally assessed until 2020 and not scheduled for tribunal until 2025, a pace the judge described as “very leisurely.” He concluded that HMRC’s 2026 position was “at least as much due to its own inaction” as to the restructuring itself.
For the UK energy sector, the outcome is particularly important. Petrofac’s North Sea operations are vital for maintaining offshore infrastructure, and disruption could have affected production and supply chains. The case highlights the challenges facing oil and gas services companies amid regulatory scrutiny, shifting energy policies, and financial pressures.
With legal uncertainty removed, focus now turns to finalising the sale and stabilising operations under new ownership. For workers and stakeholders, the decision represents a reprieve after months of uncertainty, marking a crucial step in Petrofac’s restructuring.
