Petrofac Barred from New Adnoc Contracts

UK contractor Petrofac reported on March 16 it had been suspended from competing for new awards from Abu Dhabi's national oil firm Adnoc until further notice over a bribery case. The company's share price slumped 19% on the day of the announcement, closing at £1.094 ($1.52).

Petrofac said the decision was taken by Adnoc after the UK's Serious Fraud Office (SPO) reported in January that one of the contractor's former employees had pleaded guilty to further charges in connection with contract awards in the UAE in 2013 and 2014. Those contracts were worth over $3.3bn and were for engineering, construction and procurement (EPC) work at the Upper Zakum UZ750 field development and design studies at the Bab integrated facilities project.

The SPO estimates that corrupt payments totalling over $30mn were made in relation to the contracts. David Lufkin pleaded guilty to three counts of bribery over the contracts, adding to the 11 other charges of bribery that the UK national pleaded guilty to in February 2019, relating to contracts issued to Petrofac in Iraq worth over $730mn and in Saudi Arabia valued at more than $3.5bn.

"Petrofac will continue to execute two EPC contracts for Adnoc currently under construction," the UK firm said in its statement. "Adnoc has stated that it recognises the long-standing nature of its relationship with Petrofac and has confirmed that its decision will be reviewed on a periodic basis."

The company added it was "committed to operating at the highest standards of ethical business practice," noting that no charges had been brought against any Petrofac firm or current officer or employee.

Petrofac suffered a setback in April 2020 when Adnoc cancelled EPC contracts worth $1.65bn awarded to its joint venture with Malaysia's SapuraKencana for the Dalma gas project. The reason for the cancellations was not given, but the announcement was made at a height of the first wave of the coronavirus pandemic.