Petrofac has extended $700 million of its banking facilities, which it says came “with the unanimous support of lenders.”
The extensions include a $610 million extension of its existing revolving credit facility to 2 June 2022, with the option extend for a further six months; and a $90 million extension of its bilateral term facility with the Abu Dhabi Commercial Bank to 1 April 2022. Previously, both facilities were due to be repaid or prepaid by 2 June 2021.
The $600 million extension requires a minimum liquidity covenant of $100 million, meaning that the company should have a minimum liquidity of $100 million.Â
Petrofac expects to report a net debt of $116 million as of 31 December 2020.
The company hit a roadblock earlier this year when it was banned from new contracts in Abu Dhabi due to an ongoing bribery and corruption investigation. Since approximately 10% of Petrofac’s contract revenue came from the UAE in 2019Â and the nation was its third largest market at that time, after Oman (25%) and Kuwait (15%).
A former Petrofac executive pleaded guilty to offering and making or planning to make a total of $30 million in payment to influence the award of an engineering, procurement, and construction (EPC) contract in 2013 for the Upper Zakum UZ750 Field Development Project, in addition to a variation to that contract in 2014, and a FEED contract in 2014 for the Bab Integrated Facilities Project.
The former executive had already pleaded guilty to 11 bribery charges brought forth by Britain’s Serious Fraud Office (SFO) relating to projects in Iraq and Saudi Arabia in February 2019. Those charges concerned contracts in Iraq worth more than $730 million and contracts in Saudi Arabia worth more than $3.5 billion.
These charges by the SFO include payments of $2.2 million “by Petrofac to two agents in respect of a $329.7 million EPC contract on the Badra oilfield in Iraq.” The Badra Phase One EPC contract was awarded to Petrofac in February 2012. The SFO also noted further offers of payment to influence contract variations and the extension of a related operations and maintenance (O&M) contract; Petrofac did not obtain either of the contracts and payments were not made.
Payments regarding the Fao Terminal project in Iraq were also included among the SFO’s charges, which noted that $4 million in payment were made by Petrofac with regards to an O&M contract, which was awarded to the company in August 2012 and extended in 2013, 2014 and 2015. SFO estimates that this was worth around $400 million to Petrofac.
In Saudi Arabia, charges involve three downstream projects. The SFO lists the EPC contract for Petro Rabigh Phase II Petrochemical Expansion Project, worth approximately $463 million, for which the SFO says “payments of approximately $5.8 million were ultimately made by Petrofac to its agent.”
Regarding the Jazan Refinery and Terminal Project EPC contracts, worth an estimated $1.7 billion, which were awarded to Petrofac in December 2012, Petrofac made payments of approximately $21.4 million to its agent.
Petrofac also paid approximately $19.5 million to its agent in respect to the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project, which was awarded in November 2015 and is worth an estimated $1.56 billion.
The SFO noted that its investigation into Petrofac and its activities is ongoing.
