18th November 2018
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Petrofac blames losses on gas plant delays

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The company behind building the new gas plant says ongoing delays in the Laggan-Tormore project are behind further losses of $195 million.

Petrofac blame a mixture of industrial action and bad weather for the hold-up, as it struggles to complete the £800 million scheme for French energy giant Total.

Year end results announced in February already showed the Shetland project had returned a $230 million loss.

At the time Petrofac said it expected to recognise no further profit or loss on the project over the remainder of the project. Completion was put at the third quarter of 2015. Completion of the construction-side of the job has been put at mid-June.

Today Petrofac said it had substantially “ramped up” its activity during late March and early April, as the company entered its final construction and commissioning phases.

Petrofac blamed a combination of continued adverse weather during March on Shetland and industrial action for delaying the ramp-up by almost a month.

It said it would need to expend “significantly more man-hours” to complete the project than was originally anticipated as a result of low manpower productivity levels.

The company added a “greater level of rectification and reinstatement work” was expected, while there was a failure of one sub-contractor to deliver in-line with their “agreed scope”.

“In light of these issues, we have just completed a full re-assessment of the schedule and cost-to-complete estimate for the Laggan-Tormore project,” a press release said.

“Whilst we still anticipate project completion in the third quarter of 2015, as a result of the significant amount of additional man-hours and associated support costs required over the remaining months of project execution, we now expect to recognise a further pre-tax loss on the project of around £130 million ($195 million) in 2015.”

Meanwhile, Total has distanced itself from media reports that it is seeking to sell its 80 per cent share in Laggan-Tormore for $15 billion.

The energy giant said it did not comment on “market speculation”. However, it highlighted its decision last summer to develop the Edradour and Glenlivet fields as part of an extension to Laggan-Tormore, thus demonstrating a “commitment” to the West of Shetland.

In an unattributed statement, the company said: “Total continues to work with its main contractor Petrofac on the completion of the Laggan-Tormore project. We are confident that the new time lines will be kept to and that the project will be complete by summer 2015.”

About Ryan Taylor

Ryan Taylor has worked as a reporter since 1995, and has been at The Shetland Times since 2007, covering a wide variety of news topics. Before then he reported for other newspapers in the Highlands, where he was raised, and in Fife, where he began his career with DC Thomson. He also has experience in broadcast journalism with Grampian Television. He has lived in Shetland since 2002, where he harbours an unhealthy interest in old cars and motorbikes.

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