Thursday, October 22, 2020

Petrofac oil group loses $3bn of new contracts after bribery conviction of former employee

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OIL services giant Petrofac, which is a big employer in Scotland, is facing complications in key Middle East markets amid the fallout from a bribery scandal.

Shares in Petrofac fell seven per cent yesterday after a trading update in which it said: “New order intake in the year to date reflects our recent challenges in Saudi Arabia and Iraq.”

The update came after the Serious Fraud Office announced in February that David Lufkin, the former global head of sales at Petrofac, had pleaded guilty to offering corrupt payments in an attempt to secure contracts in Saudi Arabia and Iraq.

Announcing annual results that month Petrofac said no charges had been brought against the firm or any other officers or employees.

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Read morePetrofac facing £400m legal fight over bribery allegations

Reuters reported that Petrofac’s chief financial officer Alastair Cochran told analysts yesterday the SFO’s announcement had led to it missing out on an estimated $2 billion to $3bn worth of orders from Saudi Arabia and Iraq in the first half. The company was bidding for $10bn contracts in those countries but did not win any.

Reuters noted that Saudi Arabia and Iraq accounted for 17% of overall contract revenue in 2018.

The company has contracts ongoing in both countries.

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Petrofac’s chief executive, Ayman Asfari, said the group was trading in line with its prior guidance reflecting solid operational performance across the business.

He said the group has a busy tendering pipeline in other markets with around $15bn of bid opportunities due for award in the second half of the year.

Petrofac said it had made good progress with the delivery of major projects around the world.

These include the BorWin 3 offshore wind farm grid connection in the German North Sea. The firm has won work on existing UK North Sea facilities this year.

Petrofac shares closed down 28.5p at 405p.

The SFO launched an investigation into Petrofac in 2017. It said this was related to an investigation into Monaco-based oil consultancy Unaoil.

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