Petrofac has been banned from bidding for new contracts in the United Arab Emirates after a former executive pleaded guilty to bribery over past work in the country.
The UAE had been by far the biggest target market for new work for the oil services group, accounting for $14 billion or 31 percent of its bidding pipeline as of last summer.
The shares tumbled almost 19 percent, or 25p, to 109½p on the news that Adnoc, the UAE’s state oil company, had suspended it “from competing for new awards until further notice”.
Petrofac said the decision followed the Serious Fraud Office’s announcement in January that David Lufkin, its former global head of sales, had pleaded guilty to three offences related to $3.3 billion of contracts it had secured in the UAE. Lufkin had already pleaded guilty in 2019 to bribery in relation to more than $4 billion of work in Saudi Arabia and Iraq, leaving the company unable to win work in those countries.
Petrofac designs, builds and operates oil and gas facilities and has been under investigation by the SFO over suspected bribery, corruption, and money laundering since May 2017. It has said it is engaging with the SFO and added yesterday that it was “committed to operating at the highest standards of ethical business practice. No charges have been brought against any Petrofac Group company or any current officer or employee.”
The shares have lost more than 85 percent of their value since the investigation began amid fears over potential penalties and the impact on winning new work, with last year’s oil price crash further limiting opportunities. Petrofac said that it would continue to fulfill two projects under construction for Adnoc.
It said that Adnoc “recognises the longstanding nature of its relationship with Petrofac” and would review the decision to ban it “on a periodic basis”.
The task of reviving Petrofac’s fortunes falls to the new chief executive Sami Iskander, who took over from Ayman Asfari at the start of the year.
Asfari, who led the company from 2002, remains its biggest shareholder.