Petrofac plans to reduce overhead and project support costs by $300m over next two years. Credit: ©Petrofac Limited.

Oilfield services firm Petrofac has announced its plans to reduce overhead and project support costs by at least $100m this year and by up to $200m next year.

The company is reducing capital expenditure by 40% and suspending its planned final dividend for 2019.

Petrofac will also reduce the salaries of its board, senior management and most employees by 10%-15% in response to the crash in oil prices, which was partially triggered by the coronavirus (Covid-19) pandemic.

It noted that it aimed to reduce non-staff overhead costs by up to 25%.

Petrofac Group chief executive Ayman Asfari said: “At this unprecedented time, our top priority remains the health and well-being of our people, clients and suppliers, and ensuring that we take decisive action to protect the long-term health of our business.

“I would like to thank all of our people for their outstanding response to the crisis, allowing Petrofac to continue to operate effectively and provide invaluable support to our clients during this challenging time.”

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According to the company, engineering and construction activities will continue at most of its engineering and construction project sites and offices, despite progress being impacted by travel restrictions and the government-mandated lockdowns in Iraq and India.

Petrofac said that operations and maintenance activity at its Engineering & Production Services (EPS) business continues across all regions, but added that travel and social distancing restrictions were impacting activity levels.

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).

Last November, Petrofac signed an agreement to acquire W&W Energy Services, a provider of infrastructure services to oil producers.