Orlen Lithuania, the Lithuanian oil refining and import arm of Poland’s Orlen Group, has terminated a contract worth almost €1 billion with the UK-based energy project management company Petrofac. The agreement had covered modernisation works at the company’s refinery in Mažeikiai, Kristina Gendvilė, spokeswoman for Orlen Lithuania, told BNS.
Gendvilė said Orlen Lithuania had terminated its contract with the main contractor due to persistent delays and repeated failures to meet agreed deadlines.
“This decision was taken to protect the company’s interests after an extensive financial and operational risk assessment confirmed that the project could not be completed within the agreed timeframe,” she told BNS.
The spokeswoman said the process of selecting a new general contractor was already under way to ensure continuity and successful completion of the project. Around 80 per cent of the work has already been completed, she added.
According to BNS sources, Petrofac’s subcontractors were instructed to halt work last Friday.
Last week several subcontractors said that Petrofac had been late in settling invoices throughout the project and stopped payments altogether after the firm entered administration in late October.
Senior executives at the subcontracting firms said they had been operating at a loss due to delayed payments, forcing them to reduce staff and continue work only at minimum capacity.
Orlen Lithuania said it was considering ways to settle outstanding debts owed to Lithuanian companies involved in the project, stressing that it was doing everything possible to keep the modernisation programme – designated as a project of national importance – on schedule.
In March this year, the Lithuanian government designated the modernisation project as being of strategic importance, saying it would improve refining efficiency, bolster the country’s competitiveness, reduce dependence on fossil fuels, increase industrial efficiency and open up new opportunities for investment.
In the same month, the ministers of economy, finance, energy and environment, together with Orlen Lithuania CEO, signed a letter of intent outlining state support for the company.
Under the agreement, the government committed to providing €54 million in support, including a corporate tax incentive, compensation for indirect emissions allowance costs and investment in infrastructure.
Subcontractors warn Petrofac is delaying payments, risking a halt to works
The heads of five companies working on the Mažeikiai project have confirmed to BNS that Petrofac is behind on payments for completed contract work. Only two, however, agreed to speak on the record.
Šarūnas Maslauskas, head of Resursas, an engineering firm that joined the project only in June this year, said that, to his knowledge, Petrofac had been late in paying subcontractors from the very start of the project in 2022.
“The situation has never been good […] They [Petrofac] were always late with payments; delays were there from the beginning, and invoices were always settled late,” Maslauskas told BNS.
The chief executive of another major firm, who asked for the company’s name not to be disclosed, also confirmed that the main contractor had been behind on payments throughout the entire project.
“There have been delays – sometimes larger, sometimes smaller – across the whole project. The situation has now deteriorated significantly and could soon force work to be suspended,” the executive said in a written comment to BNS.
According to Nikolajus Bliščenko, head of the industrial equipment company Amiksas, all payments to subcontractors were halted after it emerged in late October that Petrofac in the UK had been placed into administration.
“On October 24, the British press reported that the main Petrofac company had been placed into administration. Petrofac has acknowledged this. And then all payments were stopped,” Bliščenko told BNS.
In late October the BBC reported that after Dutch grid operator TenneT terminated a major offshore wind contract in the North Sea – derailing Petrofac’s planned financial restructuring – the company applied to the High Court of England and Wales to appoint an administrator.
BNS has seen a letter dated November 5 from Petrofac’s subcontractors to Orlen Lithuania’s chief executive, Dariusz Zonenberg, and to Petrofac International, the UAE-based company, expressing concern over Petrofac’s financial position.
“We have recently received information suggesting that Petrofac’s solvency may be at risk. Petrofac verbally confirmed this information on Friday, October 24, 2025,” reads the letter, signed by Alvora, Iremas, Elektrėnų Energetikos Remontas, Hotrema, Resursas and Amiksas – all subcontractors on the Mažeikiai project.
None of the executives interviewed by BNS disclosed the size of Petrofac’s outstanding debts.
Maslauskas, head of Resursas, told BNS that of the 2,000 contractor employees assigned to the project, only around 500 were currently working.
Subcontractors said that a meeting initiated by Orlen Lithuania took place on November 11 between the company, the subcontractors and Petrofac representatives.
According to those present, Orlen Lithuania indicated it was considering paying subcontractors directly for completed work, but offered no guarantees that the debts would be covered.
A letter from Orlen Lithuania to the subcontractors, seen by BNS, states that the company is looking at the possibility of settling overdue invoices itself, but does not intend to assume all of Petrofac’s obligations.
“Orlen Lithuania (OL) emphasises that responsibility for subcontractor obligations lies with Petrofac (PF), not OL. However, OL confirms it has received an official request from PF to make direct payments to subcontractors for outstanding invoices, and is currently – as an exception – considering such arrangements to ensure project continuity,” the November 12 letter states.
“OL stresses that any direct payments made to subcontractors must not be interpreted as OL assuming responsibility for PF’s failure to meet its obligations, nor will they create a precedent, commitment or expectation regarding future payments, or establish any practice between the parties,” the letter continues.
Orlen Lithuania signed a €641 million contract with Petrofac Ltd in October 2021 for the construction of a new residue hydrocracking unit at the Mažeikiai refinery. In August 2023, the company announced that the cost of the modernisation project had risen by 45 per cent to around €970 million.
Updated: included additional information about Orlen Lithuania response, future plans and the importance of the Mažeikiai project.
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