Petrofac Wins $90m Contract at Rumaila

Update, RBC Capital Markets opinion: albeit the size of the contract is not material compared to Petrofac's backlog, we believe that any positive developments from Iraq should be seen as a positive step for Petrofac. This region becomes increasingly strategic, especially for the newly created Integrated Energy Services (IES). This contract award follows the EPC for the early production facility of the Shell-operated Majnoon field ($240m in March) demonstrating PFC's ability to build a presence in the country.

Petrofac, the international oil & gas facilities service provider, announces that BP Iraq NV (BP) has awarded Petrofac and its joint venture partner, China Petroleum Engineering & Construction Corporation (CPECC), an inspection, maintenance and repair contract worth US$90 million for the Rumaila oil field in Southern Iraq.

Petrofac's Offshore Engineering & Operations (OE&O) business will lead the one-year contract, which is effective from 28 June 2011, and is worth US$63 million to the group. Work will commence following a short transition and the scope of the contract covers rotating machinery, degassing stations and cluster stations. The project is being undertaken in partnership with CPECC, a company which has well established operations and infrastructure in Iraq. As part of the agreement Petrofac's staff will be based at CPECC's accommodation facilities in Rumaila.

Commenting on the award, Petrofac's group chief operating officer, Maroun Semaan, said: "We continue to be focused on our ongoing activities in Iraq and this most recent contract win demonstrates our strategic intent to grow the breadth and depth of our service delivery within the country. It also provides an excellent opportunity for us to establish closer relations with the BP Iraq team and to continue to develop our own in-country knowledge and presence."

Bill Dunnett, managing director, Petrofac OE&O added:

"We're delighted to be able to continue to support our existing customer, BP, in its onshore operations and to build on our relationship which started in the UK North Sea and developed more recently when we took over the operatorship of the Sajaa asset in Sharjah earlier this year. This contract will be run from our operating centre in Sharjah and we hope it will further establish our capability both in the country and the region to maximise any future opportunities."

The Rumaila oil field, discovered by BP in 1953, is located in Southern Iraq, 32km from the country's border with Kuwait.

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