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Writer's pictureRaymond STERN

Petrofac secures $80m contract extension for key Iraq project

The contract extension award comes after Petrofac was suspended by ADNOC from competing for new projects over bribery charges.


London Stock Exchange-listed EPC giant Petrofac’s Engineering & Production Services division (EPS) has secured a one-year contract extension worth around $80m from a key client in Iraq.


In a statement, Petrofac said that the contract extension award is recognition of it's "successful eight-year track record of safe delivery as the incumbent operations and maintenance service provider".


The facility, which Petrofac will continue to manage, is one of the largest in the Gulf and handles around 55% of Iraq’s crude oil exports.


Commenting on the contract award, Steve Webber, SVP Operations EPS East at Petrofac, said: "Since the start of our involvement in 2012, we have supported this facility to export over 4 billion barrels of oil.


"Our teams in Iraq have an impeccable safety record and the use of innovative solutions have been at the heart of our delivery model. We look forward to supporting our client to maintain the best-in-class operation of this important national asset."

Petrofac has been providing services in Iraq since 2010 and has been involved in a range of greenfield and brownfield projects in the country worth more than $1bn.


The news comes days after Petrofac was suspended by Abu Dhabi's ADNOC Group from competing for new contracts, over bribery charges against David Lufkin, former global head of sales at Petrofac.


The UK's Serious Fraud Office's (SFO) had announced additional pleas in January 2021 by a Lufkin under the Bribery Act 2010 in relation to historic contract awards in the UAE in 2013 and 2014.


In January, SFO said that in connection with it’s ongoing investigation into Petrofac Limited and its subsidiaries, Petrofac, Lufkin had pleaded guilty at Westminster Magistrates’ Court to three counts of bribery. The offenses related to corrupt offers and payments made between 2012 and 2018 to influence the award of contracts to Petrofac in the UAE worth approximately $3.3bn.


It further revealed that Lufkin had pleaded guilty to his role in offering and making corrupt payments to agents to influence the award of an EPC contract to Petrofac in 2013 — and a variation to that contract awarded in 2014 — on the Upper Zakum UZ750 Field Development Project. In addition to the front-end engineering design (FEED) contract awarded to Petrofac in 2014 on the Bab Integrated Facilities Project, both being located in Abu Dhabi.


Total payments of approximately $30m were made or were due to be made, by Petrofac to those agents in connection with these contracts.

The charges were in addition to 11 charges of bribery that were brought by the SFO and to which Lufkin had pleaded guilty in February 2019.


These 11 charges were related to corrupt offers to influence the award of contracts to Petrofac in Iraq, with the contracts being valued at more than $730m, and in Saudi Arabia that was worth more than $3.5bn. According to SFO, Lufkin’s case had been committed for sentence to Southwark Crown Court on 11 February 2021.

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