Petrofac secures $620m contract in Iraq’s Rumaila

Petrofac in August reported a net profit slump of 44 per cent to $136 million and an 11 per cent drop in first half revenues to $2.5 billion.

The Northern Producer facility in the West Don field of the North Sea managed by Petrofac. Petrofac via Bloomberg News

Petrofac has won orders worth as much US$620 million for work in Iraq and the North Sea.

The London-listed oil services company that operates out of Abu Dhabi and Sharjah will provide staff to manage and coordinate construction projects to BP’s Iraqi arm at the Rumaila oilfield in southern Iraq, Petrofac said yesterday.

Petrofac said that it would provide the management and staff to coordinate a number of construction projects at what is estimated to be the world’s third-largest oilfield, which lies 32 kilometres north of the Kuwaiti border.

Under the terms of the contract, which runs for three years with an option for further extension of two years, it will also supervise work undertaken by third-party contractors.

The move is part of attempts by the oil major BP and its partners in the Rumaila Operations Organisation – China National Petroleum Company and South Oil Company – to quickly increase production at Rumaila, which is estimated to contain 17 billion barrels of oil.

“The award builds on an established track record for Petrofac in Iraq, in particular at Rumaila, dating back to 2011,” said Mani Rajapathy, Petrofac’s senior vice president for the Middle East. “We look forward to sharing in the continued success of the regeneration of Rumaila.”

At the same time, Petrofac reported that it had been selected to provide engineering and construction support worth up to $120 million for Chevron’s three platforms in the North Sea – the Captain, Alba, and Erskine.

The contract, awarded under a competitive tender, is for up to three years plus two one-year options and will create 70 new onshore and offshore jobs.

Shares in Petrofac rose 2.3 per cent in early trading on the news, standing at 997.5 pence midafternoon UAE time.

The company’s shares have come under pressure in recent months as project delays, especially at its Laggan-Tormore gas plant in Shetland, caused it to warn of lower profits.

Petrofac in August reported a net profit slump of 44 per cent to $136m and an 11 per cent drop in first half revenues to $2.5bn.

“On its own this contract in Iraq is a fairly small deal for Petrofac and won’t have much of a significant effect on the company’s share price,” said Andrew Whittock, an analyst at Liberium Capital. “Petrofac is as well-placed as any other service provider to win work from the international oil companies. However, the problem is that service providers such as Petrofac aren’t getting the number of new contracts that they had originally anticipated.”

A dispute over the Rumaila oilfield was one of the key reasons behind Iraq’s decision to invade Kuwait in 1990. The Iraqi government launched its invasion of the neighbouring state after accusing Kuwait of side-drilling under Iraqi soil into the vast oilfield.

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