Petrofac wraps up Middle East deals worth $1bn

Petrofac CEO Ayman Asfari said he was committed to a long-term presence in Oman. (Reuters)

LONDON: Oil industry services group Petrofac has ramped up its position in the Middle East with two deals worth nearly $1 billion.
On Wednesday, the London-listed company won a $160 million contract from the Basra Oil Company for its Iraq crude oil export expansion project. The deal is a two-year extension of Petrofac’s role as operations and maintenance service provider at the facility.
The Iraqi operation is responsible for a significant proportion of the country’s oil exports, and is located 60 kilometers offshore the Al-Faw Peninsula.
Petrofac earlier unveiled an $800 million deal with BP to work on the Khazzan phase-two gas development in Oman.
In 2014, Petrofac won a $1.4 billion contract for the first phase of the Khazzan project, which was completed in September. The latest work comprises the addition of a third gas train with a capacity for nominally handling 500 million standard cubic feet of gas per day (mmscfd), which will help drive increased total production capacity from the central processing facility to 1,500 mmscfd. 
BP Oman is lead partner in the Khazzan project with a 60 percent interest. Oman Oil Company Exploration & Production holds 40 percent.
In August, Petrofac announced another contract in Oman, a $2 billion contract to work on the Duqm refinery through a joint venture with Samsung engineering.
London-based stockbroker Kepler Cheuvreux on Wednesday published a note in which it recommended Petrofac’s shares as a “buy,” indicating a 30 percent upside from the current price of about £4.50 ($6).
Petrofac generated revenue of $7.9 billion in 2016, with well over half accounted for by the Middle East and North Africa. The London-listed company has interests in Saudi Arabia, Kuwait, UAE, Qatar and Algeria.
Kepler Cheuvreux said: “Petrofac enjoys a very strong positioning in Oman. The group has signed more than a dozen large EPC contracts in the country (most recently, one related to the Duqm refinery). Its relationship with BP is strong (given the maintenance contract in February 2017), and the award of the phase two of this project is proof of the good execution of Petrofac on phase one, which was delivered bang in line with expectations.”
Petrofac CEO Ayman Asfari, commenting on the latest deal with BP for Oman, said, “We look forward to continuing to demonstrate our commitment to a sustainable and long-term presence in the Sultanate through the safe and timely delivery of this project for BP.”
Petrofac’s shares have underperformed this year after it was dragged into an oil industry corruption scandal by the UK’s Serious Fraud Office. The SFO is probing allegations that Unaoil has been acting as a “middleman” in fixing lucrative service contracts for multinationals for a fee. Petrofac has denied any wrongdoing, but its share price remains 40 percent lower than before the SFO swoop.
In May, Petrofac suspended Marwan Chedid as chief operating officer until further notice. As a consequence he resigned from the board.