Petrofac is set to incur a further $195million charge on the Laggan-Tormore project as a result of continued delays.
The company is currently building the Shetland Gas Plant for Total after signing a £800million deal in 2010 for engineering, procurement, supply, construction and commissioning of the site.
Petrofac has previously said it expected to recognise no further profit or loss on the project over the remainder of the contract duration.
The announcement was made as it was revealed the group had already seen a $230million loss on the project.
Petrofac said it had “ramped-up” activity on the Laggan-Tormore site in late March and April.
However it has been affected by adverse weather conditions and industrial action, delaying the project by an additional month.
The company said has activity levels had increased at the site it had become apparent that “significantly” more man-hours to complete the project that previously anticipated.
Ayman Asfari, Petrofac’s group chief executive, said: “We are deeply disappointed by this additional cost to complete on the Laggan-Tormore project.
“As we noted in our year-end results announcement, given the extent of direct construction involved in the project, Laggan-Tormore is different from the rest of our EPC project portfolio, where we typically utilise sub-contractors to deliver construction services.
“We had to take on this level of direct construction responsibility when some of our sub-contractors failed to deliver in line with their agreed scopes.
“Our lack of experience of operating a direct construction model in a wholly new geography for our Onshore Engineering & Construction (OEC) business, particularly in a location where labour costs are much higher and productivity much lower than we are used to, has cost us dearly.
“We have already affirmed that we will no longer take construction risk on large lump-sum projects within the UK to avoid a similar experience to Laggan-Tormore moving forward.
“For now, my senior management team and I are focused on delivering the project in line with the revised schedule agreed with our client.
“As such, we have refreshed the site leadership team and further strengthened it with key members of our Sharjah-based OEC team and have changed a number of elements of our working practices to drive the project through to completion.
“Putting the challenges we are facing on this project to one side, the rest of our portfolio continues to perform in line with expectations.”
Earlier this month, the company revealed it had completed a project for Nexen Petroleum on its Golden Eagle Development Area.
The company said the work was delivered through its Plant Asset Management consulting business.
It involved the development and implementation of a maintenance programme for the installation, which is 70 kilometres north east of Aberdeen.
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