Drake & Scull wins Dh1.3bn Iraq pipeline deal

Drake & Scull International strikes its first deal in Iraq, winning half of a Dh1.3bn contract to lay pipelines at one of the world's largest oilfields.

Drake & Scull International's pipeline project for the Zubair oilfield is due for completion by July 2014. Above, engineers watch over flares at the Zubair oilfield. Essam Al Sudani / AFP

Drake & Scull International (DSI) has won a Dh1.3 billon (US$353.9 million) pipeline construction contract in Iraq, intended to service one of the world's largest oilfields.

The builder based in Dubai was awarded the contract for half of the value of the oil and gas project at the Zubair oilfield as part of a joint venture with Sicim of Italy.

The contract is the first big win for DSI's newly established oil and gas operations.

DSI's pipeline project is due for completion by July 2014, said Khaldoun Tabari, the company's chief executive. "The Iraqi construction market offers massive potential in areas such as oil and gas," he said.

"Our work on the Zubair oilfield marks an important milestone for DSI and will optimise our exposure and market reach to the oil and gas domain". The company's stock rose 0.2 per cent to 84.2 fils per share in trading yesterday following the announcement.

Iraq's cabinet awarded the contract on Wednesday. The two-year contract can be extended by a year, Ali Al Dabbagh, a state minister, told Bloomberg News.

The Zubair field, near Basrah, is expected to produce 1.2 million barrels of oil per day by 2017, according to official estimates.

In May, Mr Tabari said the contract would generate about $300m in revenue for the company.

Although the sums of money were relatively small compared with DSI's backlog of Dh7.4bn, the deal is a good strategic move, said Loic Pelichet, an analyst at NBK Capital.

"It's their entry point into oil and gas and also into Iraq. From a strategic perspective, it's a very good deal," he said.

Working on one of the world's biggest oilfields in partnership with Sicim, which has a 50-year track record in the industry, will put DSI in a good position to ensure future growth.

"They'll learn a lot and that'll stand them in good stead," Mr Pelichet added.

Eni, Occidental Petroleum Corporation and Korea Gas Corporation signed a contract in 2010 with Iraq's state-owned South Oil Company and Missan Oil Company to redevelop the field.