Companies
Big UK Firm, Reinstated in UAE After Bribe Plea, Wins $700M Award
UK-based energy contractor Petrofac was reinstated to work in the UAE in 2022 after a one-year suspension, also in Iraq and Saudi Arabia, related to a bribe conviction of former executives
Image: Petrofac
Petrofac, a U.K.-based energy contractor and a leading Middle East services provider before a 2021 bribery conviction and contracting suspension related to work in three countries in the region, won a $700-million EPC award from the national oil company in UAE, one of the three.
The contract, for work to expand the Habshan gas processing complex, is the firm’s first since its contract eligibility was reinstated last year. The Abu Dhabi National Oil Co. award, confirmed July 3 by Petrofac and the UAE firm, includes three gas compressor trains and associated utilities and power systems, and is intended to increase gas output for internal use and for export, and to produce blue hydrogen. It is part of an estimated $1.34-billion project to expand UAE’s natural gas pipeline network from about 3,200 kilometers to more than 3,500 km.
Habshan award contenders included Spain’s Tecnicas Reunidas, Abu Dhabi’s National Petroleum Construction Co.; China Petroleum Engineering & Construction Corp., Greece-based Archirodon, India’s Larsen & Toubro and Egypt’s Enppi, according to industry publication Upstream. It said the contract also was one of the largest the state-owned oil company has awarded this year.
Petrofac had pleaded guilty in 2021 to seven counts brought by U.K. authorities of failing to prevent former senior executives from offering or paying bribes to obtain contracts in Saudi Arabia, Iraq and UAE between 2011 and 2017. The firm said it had worked in UAE since 1991.
In its latest filing to ENR, the firm was No. 20 on the Top International Contractors list in 2020, reporting nearly $5 billion in global revenue and also ranking second among firms working both in the Middle East and in the oil sector.
Petrofac Chairman René Medori noted in a 2021 statement after its sentencing “a comprehensive programme of corporate renewal.” He added, "We have fundamentally overhauled our compliance regime, as well as the people, and the culture that supports it."
The firm improved its current performance, reporting In a regulatory filing that total backlog for the first six months of 2023 was set to increase to about $5.6 billion, up from $3.4 billion at the end of 2022.
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Petrofac said it expects backlog for its engineering and construction unit to more than double to $3.5 billion, up from $1.6 billion at the end of last year. It won a contract under a framework agreement with Dutch-German transmission system operator TenneT for 2-GW offshore wind transmission systems in a joint venture with Japan’s Hitachi, as well as the construction contract for a $1.5-billion petrochemical project in Algeria and EPC work in Lithuania.
But Petrofac said the engineering and construction segment expected to report a first-half loss of about 20%, due to write-downs of legacy contracts. “We remain focused on closing out legacy contracts, with five of the remaining eight contracts expected to be completed during the second half of the year or early in 2024," the firm said.
Taking over as CEO in April is Tareq Kawash, who had been a McDermott International senior vice president. “Petrofac has a long and strong track record supporting [the national oil company] in the UAE, rooted in our steadfast commitment to maximizng local delivery, investing in the local supply chain, and developing local teams," he said.
