Petrofac looks beyond Dubai

Petrofac, the British oil services company with a significant presence in the Emirates, will wind down its operations in Dubai by October, a company executive said yesterday, while it pursues a record contract of up to US$4 billion (Dh14.69bn) in central Asia. The company expects the contract in Turkmenistan, plus new business in the Gulf, to increase the size of its order book by December to more than the $8.1bn it recorded at the end of last year, said Keith Roberts, Petrofac's chief financial officer.

"We're very confident we can win our fair share of business," Mr Roberts said yesterday. "The market is still quite competitive, certainly in the first five months of this year, where we've been bidding we've been seeing some quite intense competition." The company's share price, which fell 30 pence yesterday in London to 1,221 pence (Dh67.12), has more than doubled in the past 12 months. Petrofac said it was likely to be awarded a major engineering, procurement and construction contract worth between $3bn and $4bn to build a gas-processing facility and infrastructure for a gasfield in south-eastern Turkmenistan. It is completing a $100 million preliminary engineering contract and will decide whether to convert it into the full construction contract "in the near future", Mr Roberts said.

The award would be the largest in the company's history and Petrofac is likely to involve its joint-venture with Mubadala Development, known as Petrofac Emirates, Mr Roberts said. Mubadala is a strategic investment company owned by the Abu Dhabi Government. "It is highly probable that we'll involve Petrofac Emirates in the project in some way; they're very strong in government relations between the UAE and the Turkmenistan governments," he said.

In Dubai, where Petrofac has managed the emirate's offshore oil wells since 2006, the company will transfer most responsibilities and staff to the government-owned Dubai Petroleum. Mr Roberts described the move as "a bit of a disappointment" after a year in which "the asset performed extremely well". "Dubai Petroleum has taken a decision to insource a number of services that were outsourced to us in the contract we signed," he said. "We're not going to be employing 900 people there; many of those people will be transferred back to the client."

The impact on the company's finances from exiting Dubai "is not material", he said. Petrofac is also pursuing contracts in Abu Dhabi, Qatar, Kuwait and Saudi Arabia, Mr Roberts said. It is also looking at Iraq, which aims to increase oil output sharply in the next five years. International oil companies such as Shell and ExxonMobil have been wary of Iraq because of its tough contractual terms and the country's limits on the firms' ability to claim part of the oil reserves as their own.

As an oil services company, Petrofac was less concerned about such obstacles, Mr Roberts said. [e-mail]