PETROFAC has said it has suffered a further $431m (£310m) losses on a contract to build a giant gas terminal on Shetland where the company has complained about the impact of low productivity and bad weather.
The oil and gas services giant, which has been shedding jobs in Aberdeen, saw the costs of work on the Laggan Tormore terminal spiral in 2015 taking the total losses on the contract to around $610m.
Built to handle the output from Total’s giant Laggan Tormore gas field off Shetland the terminal started operations earlier two weeks ago, around 18 months behind the original schedule.
Petrofac’s experience left the company ruing the decision to undertake such a big fixed price construction contract in what was an unfamiliar territory for the company.
In April Petrofac’s chief executive Ayman Asfari said labour costs incurred on the project were much higher and productivity much lower than the company was used to. Petrofac had 2,000 people working on the terminal at peak times including contractors.
The company suffered more than 300 days of interruption on Laggan-Tormore because of high winds and poor weather.
Announcing full year results Petrofac emphasised it will not undertake a similar contract in the UK, where the company has been cutting jobs amid the crude price plunge.
Last month Petrofac announced it was axing 160 jobs. The bulk of the job losses are thought to have been in Aberdeen, where Petrofac wanted to simplify back office operations.
Petrofac said its full-year revenue grew 10 percent and that its order book stood at record levels at the end of the year, sending shares up more than 12 percent in morning trading.
The company said most of the $20.7 billion backlog came from its core Middle Eastern markets.
"The pipeline appears strong, although we have concerns that it may be much weaker if further contracts are deferred/cancelled as a result of the continuing low oil price environment" analysts at Cenkos Securities said.
Oil producers have announced billions of dollars of spending cuts in the face of prices that have dipped to $30 per barrel, hurting demand for oilfield services companies.
Petrofac reported a net profit of $440m for 2015, before accounting for the Laggan Tormore project, compared with a net profit of $581m a year earlier and above a company-compiled consensus $435m.
Shares in Petrofac closed up five per cent, 35.5p, at 777.5p.
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