A restructuring of one of the world's biggest oil and gas services firms will lead to about 1,000 jobs in the Middle East being spun out into a new venture.
TechnipFMC, a company created in 2017 via the merger of France's Technip and US-based FMC Technologies, has said it will split into two separate ventures - an onshore/offshore energy business provisionally named RemainCo, and an engineering and construction business currently titled SpinCo.
The company said that the 2017 merger had created "a new subsea leader" that had refined economics in the market. It created a company with 37,000 employees - 1,600 of whom work in the Middle East - but which last year declared a net loss of $1.9 billion (Dh6.97bn) as revenue fell 17 per cent to $12.5bn.
“Since the creation of TechnipFMC, we have pioneered the integrated business model for subsea and transformed our clients’ project economics, said Doug Pferdehirt, chairman and chief executive of TechnipFMC. "To further enhance value creation, our board of directors and management team have continuously evaluated strategic options and, after a comprehensive review, determined that it is in the best interest of TechnipFMC and all of our stakeholders to create two diversified pure-play leaders. We are confident that the separation would allow both businesses to thrive independently within their sectors, enabling each to unlock significant additional value.”
The proposed de-merger would see 22,000 employees staying in RemainCo, including 300 of the company's 1,600 Middle East employees. It will be headquartered in Houston but domiciled in London and will focus on the upstream oil and gas market. It is expected to have revenue of about $7bn, a backlog of $10bn and will be headed by Mr Pferdehirt, according to a company document presenting the deal to shareholders. Its shares will trade on stock exchanges in New York and Paris.
SpinCo will be headquartered in Paris and will trade on the Euronext Paris exchange. It will focus on the midstream and downstream markets, have revenue of about $6bn, a backlog of $19bn and 15,000 employees. It will be run by former Schlumberger executive Catherine MacGregor, who joined the firm last month.
About 1,000 of the 1,600 staff based in the Middle East will work within the spin-off venture, a spokeswoman told The National. The remaining regional roles have yet to be defined.
TechnipFMC has offices in the Middle East in the UAE, Kuwait,Oman, Qatar, Saudi Arabia, Azerbaijan and Kazakhstan.
The company said that the proposed spin-off is "subject to general market conditions", as well as regulatory and board approval and consultation with employee representatives. It is expected to complete in the first half of next year.
