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Petrofac Loses out on $10 Billion in Contracts as SFO Probe Drags On

Source: Reuters 6/25/2019, Location: Middle East

Oilfield services provider Petrofac lost out on $10 billion (8 billion pounds) worth of contracts globally due to a probe by Britain’s Serious Fraud Office into dealings in Saudi Arabia and Iraq, its finance chief said on Tuesday.

Petrofac shares, which have lost nearly half of their value since the SFO first announced its probe in 2017 as part of a wider investigation into Monaco-based oil and gas consultancy Unaoil, fell as much as 6.4%.

In February, the SFO said Petrofac’s former head of sales, David Lufkin, had pleaded guilty to 11 counts of bribery related to oil deals in Iraq and Saudi Arabia. The SFO said it was continuing its investigation into Petrofac’s use of agents in jurisdictions including the two countries.

The British company was in the process of bidding for contracts when the SFO announced charges against Lufkin.

“The timing of those bids coincided with the SFO’s announcement... that inevitably ... raised concerns amongst all stakeholders,” Chief Financial Officer Alastair Cochran said on a call with analysts on its trading update.

He said the announcement led to the loss of an estimated $2 billion to $3 billion worth of orders from Saudi Arabia and Iraq in the first half of the year and some $10 billion worth of deals were not considered by clients.

The company - which designs, builds, operates and maintains oil and gas facilities - has major operations in the Middle East and contracts from the region are critical to operations.

The projects named in the SFO’s statement in February included Petrofac’s engineering contracts for the Petro Rabigh petrochemical plant, partly owned by Saudi Aramco, and Aramco’s Jazan refinery in 2012.

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