Is Ed Miliband facing his first major energy crisis as Petrofac’s collapse threatens the UK’s North Sea future?

The UK Government has been placed on high alert amid fears of a potential collapse of Petrofac, one of the country’s most significant offshore engineering and energy service firms. Energy Secretary Ed Miliband is reportedly monitoring the situation closely, as the crisis threatens both the stability of the North Sea’s energy operations and Labour’s broader energy security ambitions.

Sources within the Department for Energy Security and Net Zero (DESNZ) confirmed that officials have been briefed on contingency measures in the event Petrofac enters administration — a move that could jeopardize more than 2,000 skilled jobs across Scotland and the North Sea oil sector.

The Aberdeen-based company, which employs around 8,000 people worldwide, is responsible for maintaining and operating several offshore platforms for major energy players, including Shell, BP, TotalEnergies, and Ithaca Energy. Petrofac also serves as a “duty holder” for some installations, making it legally responsible for safety — a critical concern should financial instability affect operations.

The potential downfall of Petrofac comes after the loss of a major European contract with Dutch-German grid operator TenneT, reportedly worth more than €13 billion (£11 billion). The cancellation has derailed a year-long restructuring plan, leaving Petrofac’s future uncertain.

Financial analysts have warned that the government may be forced to intervene if the company fails to stabilize. “As a duty holder for offshore fields, any operational incident could leave the taxpayer footing the bill,” warned Ashley Kelty, energy analyst at Panmure Liberum.

Miliband, who has been under pressure to defend Labour’s stance on North Sea drilling, now faces an urgent test of his leadership and policy direction. Critics within the energy industry argue that the government’s mixed messaging on oil and gas licensing has created uncertainty for companies already grappling with high costs, volatile markets, and tighter environmental regulations.

Adding to the complexity is Petrofac’s troubled financial history. Once valued at over £6 billion, the company has seen its market capitalization collapse to roughly £20 million. A string of crises — including corruption probes, the pandemic’s economic shock, and costly project delays in the Middle East — have left the firm burdened by debt and fighting for survival.

Emergency talks are said to be ongoing between Petrofac’s leadership, headed by CEO Tareq Kawash, and lenders. The advisory firm Teneo has been lined up to handle a potential administration process if no rescue plan materializes.

Industry observers say the outcome could carry significant political weight. “This situation will test Labour’s ability to balance environmental commitments with industrial realities,” said one analyst. “Miliband will need to show he can protect British jobs while advancing a clean energy transition.”

Officials at DESNZ declined to comment on whether direct support for Petrofac is being considered. However, insiders suggest that discussions are ongoing about protecting the UK arm of the company — which remains profitable — should the parent entity collapse.

The timing could not be more delicate for Miliband, who is spearheading Labour’s £22 billion clean energy plan while facing resistance from both environmental activists and oil sector unions. A major North Sea disruption would risk undermining confidence in the government’s ability to manage Britain’s shift from fossil fuels to renewables.

For now, the department continues to monitor developments as Petrofac races against time to secure its future. But as the North Sea’s most critical operator wavers, one thing is clear: the stakes are not just corporate — they are political.

FAQs

Q1: What triggered Petrofac’s current financial crisis?
Petrofac’s troubles intensified after losing a €13bn contract with TenneT, derailing its restructuring plan and leaving the company unable to service its debts.

Q2: How is Ed Miliband involved in the Petrofac situation?
As Energy Secretary, Miliband is overseeing the government’s monitoring of Petrofac’s collapse risk, balancing the need for stability in North Sea energy with Labour’s climate commitments.

Q3: What happens if Petrofac collapses?
If Petrofac enters administration, thousands of jobs could be affected, and the UK government may have to intervene to ensure offshore safety and continuity of operations.

Q4: What does this mean for Labour’s energy transition plans?
A collapse could challenge Labour’s goal of a smooth transition to green energy, highlighting the importance of stable industrial partners during the shift.