Petrofac has found itself in an unenviable situation after being suspended from bidding on new projects by Abu Dhabi National Oil Company (ADNOC). Petrofac has lost access to three of the largest and most promising oil and gas project markets in not just the Middle East and North Africa (MENA) region, but globally, says GlobalData’s MEED.
The considerable setback has been brought about by a single former executive of the company facing bribery allegations levelled by the UK’s Serious Fraud Office. David Lufkin, a British national and former global head of sales at Petrofac, pleaded guilty to 11 counts of bribery linked to deals in Iraq and Saudi Arabia in February 2019. He admitted to paying middlemen to win two project contracts in Iraq worth $730m, and three projects in Saudi Arabia worth $3.5bn.
Indrajit Sen, Oil & Gas Editor of GlobalData’s MEED, comments: “The scandal has since caused Petrofac to lose out on project opportunities in both those markets. According to sources, while operators in Iraq have relaxed punitive measures on Petrofac, allowing the contractor to bid for a few specific projects, Saudi Aramco continues to boycott the UK firm, not inviting it to bid for its projects.”
The same corruption case continues to rattle Petrofac. ADNOC’s decision to suspend the contractor from bidding for new projects in Abu Dhabi relates to Lufkin additionally pleading guilty, in January, to making corrupt offers and payments between 2012 and 2018 to influence the award of contracts worth approximately $3.3bn to Petrofac in the UAE.
Sen continues: “Project awards in the UAE accounted for roughly 10% of Petrofac’s revenues in 2019. Therefore, the ban by ADNOC has, presumably, come as a harder blow for the company’s energy business prospects. Moreover, the contractor was expected to be in the running for a handful of key engineering, procurement and construction (EPC) contracts in Abu Dhabi, most notably for the onshore package – the larger of the two packages – of the estimated $1.65bn Dalma offshore sour gas field development megaproject.
“The embargo of sorts that Petrofac is suffering in the region demonstrates that state energy majors have zero tolerance for foul play in business and are keen to weed out corrupt practices to win contracts. As national oil companies proceed with the execution of crucial energy development and economic diversification strategies, they are sending out a clear message that they want to do business with ethical stakeholders only.”
