By John Lee.
Shares in Petrofac were trading up more than 7 percent on Monday, as the company was ordered to pay GBP 77 million [$105 million] after the UK's Serious Fraud Office (SFO) secured further convictions in its investigation into bribery and corruption at the Jersey-registered energy services company.
On Friday, Petrofac Limited pleaded guilty to seven separate counts of failing to prevent bribery between 2011 and 2017.
Petrofac Limited admitted that it failed to prevent former senior executives of the Petrofac Group from paying GBP 32 million (USD 44 million) in bribes, to help the Petrofac Group win over GBP 2.6 billion (USD 3.5 billion) of contracts in the oil and gas industry in Iraq, Saudi Arabia and the United Arab Emirates.
The Court heard how, over a period of six years, senior executives within the Petrofac Group engaged in elaborate schemes to corrupt the awarding of contracts, using agents to systematically bribe officials to win lucrative contracts by unfair and dishonest means.
A key feature of the case was the complex and deliberately opaque methods used by these senior executives to pay agents across borders, disguising payments through sub-contractors, creating fake contracts for fictitious services and, in some cases, passing bribes through more than one agent and one country, to disguise their actions.
Lisa Osofsky, Director, Serious Fraud Office, said:
"By pleading guilty, Petrofac Limited has accepted that senior executives within the Petrofac Group acted deliberately and without conscience in the pursuit of greed. The company's failure to prevent this conduct distorted competitive market conditions and tainted the oil and gas industry.
"Today's result should serve as a warning; the SFO will use all the powers at its disposal to root out and prosecute companies and individuals, whose criminal activity detrimentally affects the reputation and integrity of the United Kingdom.
"The SFO welcomes Petrofac Limited taking responsibility for its conduct."
This is the third set of convictions secured by the SFO in its four-year investigation into cross-border corruption at the Petrofac Group. David Lufkin, former Head of Sales at Petrofac pleaded guilty to 11 counts of bribery in 2019 and 3 counts of bribery in 2021.
Lufkin was today sentenced to a two-year custodial sentence, which was suspended for 18 months. In addition to pleading guilty, David Lufkin co-operated with SFO investigators and assisted with the investigation.
The SFO continues to investigate this case.
Petrofac Chairman René Médori said:
"This draws a line under a regrettable period of our history. We have taken responsibility, reformed and learned from these past mistakes, as acknowledged by the SFO and the Court. Most importantly, the extensive work that we have done since the SFO investigation began means that the Petrofac of today has a comprehensive compliance and governance regime that meets or exceeds international best practice.
"The past behaviour uncovered by the SFO would not be possible today, and we look to the future a better and more focused company, well positioned to capitalise on the opportunities we see before us."
(Sources: SFO, Petrofac)
By John Lee.
Petrofac shares closed the day up more than 26 percent on Friday, after the company announced that it has reached a plea agreement with the UK Serious Fraud Office (SFO) in relation to bribery in Iraq, Saudi Arabia and the UAE.
The Company indicated guilty pleas to seven counts of failing to prevent former Petrofac group employees from offering or making payments to agents in relation to projects awarded between 2012 and 2015 in Iraq, Kingdom of Saudi Arabia and the UAE, contrary to Section 7 of the UK Bribery Act 2010. These offers or payments were made between 2011 and 2017.
It added that all employees involved in the charges have left the business.
A sentencing hearing is scheduled to take place at Southwark Crown Court commencing on Monday 27 September 2021 [Note: Subsequently postponed to Friday 1st October, and then to Monday 4th October]. The Company will make a further announcement following sentencing or any adjournment.
In a statement to the markets, Group Chief Executive Sami Iskander said:
"With my new management team we are rebuilding the company into a new Petrofac that's relevant for the future, across both traditional and new energies, built on a foundation of the highest ethical standards."
(Sources: Petrofac, SFO)
By John Lee.
Petrofac has announced that for the year ended 31st December 2020, the company had revenues of $238 million in Iraq -- $105 million in engineering and construction, and $133 in engineering and production services.
This represented about 6 percent of the company's total turnover, and was down from a total of $325 million in 2019 ($145 million in engineering and construction, and $180 in engineering and production services).
In its Annual Report for the year, the company said that Iraq accounts for 7 percent of its total backlog of $1.7 billion, implying a backlog in Iraq of approximately $119 million.
Posted in Iraq Oil & Gas News Comments Off on Petrofac Iraq Revenues Down
By John Lee.
Petrofac has announced that its Engineering & Production Services division ('EPS') has secured a one-year contract extension worth around US$80 million with a key client in Iraq.
While not mentioning the specific project, the company said:
"The award is recognition of Petrofac's successful eight-year track record of safe delivery as the incumbent operations and maintenance service provider.
"The facility which Petrofac will continue to manage, is one of the largest in the Gulf and handles around 55% of Iraq's crude oil exports."
Basra Oil Company (BOC) awarded Petrofac the operations and maintenance (O&M) contract for its Iraq Crude Oil Export Expansion Project (ICOEEP) at Fao [Faw] Terminal in 2012.
Steve Webber, SVP Operations EPS East, commented:
"This contract extension strengthens our long-term client partnership. Since the start of our involvement in 2012, we have supported this facility to export over 4 billion barrels of oil. Our teams in Iraq have an impeccable safety record and the use of innovative solutions have been at the heart of our delivery model. We look forward to supporting our client to maintain the best-in-class operation of this important national asset."
Petrofac has been providing services in Iraq since 2010, involved in a range of greenfield and brownfield projects in the country worth more than US$1 billion.
Posted in Iraq Oil & Gas News Comments Off on Petrofac Wins Contract Extension in Iraq
Petrofac's Engineering & Production Services division (EPS) has secured a further six-month contract extension with Basra Oil Company (BOC) for its long-standing Iraq Crude Oil Export Expansion Project (ICOEEP).
According to a statement from Petrofac, the confirmation of the contract extension is recognition of Petrofac's successful seven-and-a-half-year track record of safe and efficient delivery and ability to sustain and improve export levels as incumbent operations and maintenance service provider.
The facility, which is one of the largest export terminals in the Gulf and handles around 50% of Iraq's crude oil exports, is located 60 km offshore the Al Fao Peninsula in Southern Iraq. It comprises a central metering and manifold platform and four Single Point Moorings (SPMs) which facilitate oil export onto awaiting crude carrier tankers. In addition, Petrofac is responsible for almost 300 km of subsea pipelines, 1800 metres of subsea and floating hose infrastructure and a marine spread comprising 14 vessels.
Mani Rajapathy, Managing Director, EPS East, said:
"We are delighted to be awarded this further contract extension in Iraq by our longstanding client BOC. During this current challenging period for operations we have continued to work well together, improving the daily export beyond two million barrels. We thank BOC for their consistent support and look forward to maintaining the best-in-class operation of this important national asset."
Mr Ihsan Ismaael, Director General of BOC commented:
"Petrofac continues to be a true partner to BOC, ensuring uninterrupted and record exports. We appreciate their commitment, particularly during this recent period, and congratulate them for hitting new export highs."
Petrofac has been present in Iraq since 2010. Today, Petrofac employs around 400 people in country and is currently working on a number of projects for a variety of NOC and IOC clients.
IBBC hold Council Meeting, Sector roundtables, Reception & Dinner for Members on 28 and 29 January
The Iraq Britain Business Council (IBBC) held its Council Meeting, Dinner & Reception for IBBC Members and distinguished guests on 28 January. The Council Meeting, hosted by Baroness Nicholson of Winterbourne, President of IBBC and the Prime Minister’s Trade Envoy to Iraq, Azerbaijan, Turkmenistan and Kazakhstan took place in the House of Lords.
Ms Jwan Khioka, Minister Plenipotentiary from the Embassy of the Republic of Iraq greets IBBC Members and distinguished guests
The Council Meeting was followed by a Reception & Dinner hosted by Brigadier James Ellery CBE at the Cavalry & Guards Club, where Ms Jwan Khioka, Minister Plenipotentiary from the Embassy of the Republic of Iraq greeted more than 40 guests.
After dinner, Dr Heike Harmgart, Managing Director for the Southern and Eastern Mediterranean (SEMED) region at the European Bank for Reconstruction and Development (EBRD) elaborated EBRD’s strategy and business plan for the SEMED region, especially highlighting the business opportunities in the Republic of Iraq.
Dr Heike Harmgart, Managing Director for the Southern and Eastern Mediterranean region at the European Bank for Reconstruction and Development (EBRD), after dinner speaker
The Education, Training and Heritage Sector Table Meeting hosted by IBBC in its London offices on 28th January was attended by representatives from the UK Embassy of the Republic of Iraq, Bath Spa University, the University of Northampton, Stirling Education, UB Holdings, Unihouse Global, the British Council and the IBBC.
The meeting agreed its over-riding objective is to improve education across Iraq, build in-country capacity and facilitate cooperation between Iraq and international, especially UK, universities. The BC confirmed it is continuing to function in Iraq, albeit at a lower activity level with some restrictions to personnel movement. The proposal for senior representatives of UK universities to visit Iraq was well supported, subject to acceptable security, all parties agreed that involvement of relevant ministries in Iraq is essential to A number of initiatives to encourage Iraq’ entrepreneurs in were presented, including establishing a Tech Hub in Baghdad, run seminars to assist students aiming to study outside Iraq and setting up an alumni network for Iraqi graduates who has studied in UK. It was agreed that the Chevening Programme had been successful and should continue.
A highlight of the meeting was the detailed presentation of Dr Amir Saadati, Strategic Advisor, City & Guilds MENA (Projects) (https://www.cityandguilds.com/) who gave a detailed presentation on the organisations plan to roll out a number of essential training programmes across Iraq in conjunction with IBBC Member Stirling Education.
IBBC Education, Training and Heritage Sector Table Meeting
The Construction and Infrastructure Sector Table met earlier in the day with Jones Lindgren of Perkins and Will in the chair. The main discussion was about current work and opportunities in the water and environment sectors with Brad Moxham of Pell Frischmann and Steve Rowan of Eame, both active in Iraq, leading the discussion.
The IBBC Executive Committee met in the morning of 29th January. The Committee of IBBC Members, reviews IBBCs activities and advises the management of its future planning. After many years of service Alistair Kett of PWC, Hadi Nezir of UB Holding, Hani Akkawi of CCC retired from the committee. The new committee members are John Curtin of EY, Charles Walker of ZHA, Charlie Burbridge of G4S and Sadar Al-Bebany of Sadar Trading Agencies.
IBBC Executive Committee meeting
The Oil & Gas Sector Table Meeting was hosted by IBBC in its London offices On 29th January was attended by representatives from BP, ExxonMobil, SKA, Constellis, Gulftek, Petrofac, Basrah Engineering Group, the UK FCO and the IBBC. There was wide ranging discussion on the current situation in Iraq and its adverse impact on investment in the country, in particular in the oil and gas sector. There was general agreement that more investment is required to maintain current levels of production, and additional investment will be required to increase production and monetise the extensive associated gas reserves currently being flared.
Oil & Gas Sector Table Meeting
Posted in Investment, Iraq Banking & Finance News, Iraq Education and Training News, Iraq Industry & Trade News, Iraq Oil & Gas News Comments Off on IBBC Council meeting, Sector Tables and Members’ Dinner
By John Lee.
Petrofac has said that a fall in first-half order intake was partly due to an investigation into the oilfield services company’s dealings in Saudi Arabia and Iraq.
In its results for the six months ended 30th June 2019, Petrofac's Group Chief Executive Ayman Asfari commented:
"Petrofac has delivered good results that reflect solid operational performance across the business.
"New order intake year to date has been impacted by recent challenges in Saudi Arabia and Iraq.
"Looking forward, the Group has a busy tendering pipeline with around US$13 billion of bid opportunities due for award in the second half of the year."
It added that "no charges have been brought against Petrofac, or any officers or current employees."
Earlier this year, David Lufkin, previously Global Head of Sales for Petrofac International Limited, pleaded guilty to eleven counts of bribery.
Posted in Iraq Oil & Gas News Comments Off on Petrofrac Order Intake hit by Iraq Fraud Investigation
As with previous years, it was very well attended by over seventy delegates, and allowed our members to mingle and network with representatives of other businesses, civil servants, and Iraqi government dignitaries.
Speakers and organisations represented included:
- Dr Falah Al Amiri, Advisor to the Ministry of Oil, Government of Iraq
- Dr Hameed Ahmed, Deputy Higher Education Minister
- Eng. Dara Rasheed, Deputy Minister of Housing, Construction & Municipalities
- Jon Wilks CMG, HM Ambassador to Iraq
- Beverley Simpson, Director, Department of International Trade (DIT) in Iraq
- Dr Victoria Lindsay, Director, British Council, Iraq
- Emma Sky, Director, Greenberg World Fellows Program, Yale University
- Nicolas Pelham, The Economist
- Professor Toby Dodge, London School of Economics
- Dr Renad Mansour, Chatham House
- Al Burhan Group
- Al Maseer Insurance
- Basra Gateway Terminal
- Bath Spa University
- Financial Times
- GulfTek Saudi
- Management Partners
- Mosul University
- OiLSERV Kuwait
- Perkins+Will UK, Ltd
- Pro-Technique Group
- Shire Oak International
- Stirling Education
- Tube Tech International
- TurnKey LLC
- Unihouse Global
- University of Dundee
- University of Liverpool
- University of Northampton
- University of Sheffield
- Wood Plc
- Zaha Hadid Architects
Sessions included discussions and panels on the state of Iraq, contemporary Middle Eastern politics, meetings for our various sector tables (including oil and gas, and construction and infrastructure), economic development strategies for Iraq, and how higher education partnerships could be developed between the UK and Iraq. A biannual council meeting for representatives of our member organisations was also held.
Christophe Michels, Managing Director of the IBBC was happy with how the weekend went:
“As in previous years the Retreat has attracted some of the finest minds from business, academia, politics, media and diplomacy working on Iraq to conduct truly meaningful and intimate discussions”.
Baroness Emma Nicholson, President of the IBBC and the Prime Minister’s Trade Envoy to Iraq, Azerbaijan, Kazakhstan and Turkmenistan said:
“IBBC has had a fantastically happy and hugely productive busy weekend. We call it a retreat, but I am not sure what it was a retreat from! People were working morning, noon, and night, and they were making great achievements, and huge strides in the various different table meetings…one of the best I can ever remember”.
For more information on the Iraq Britain Business Council, visit our website at https://www.iraqbritainbusiness.org/
Posted in Construction & Engineering In Iraq, Investment, Iraq Banking & Finance News, Iraq Education and Training News, Iraq Industry & Trade News, Iraq Oil & Gas News, Politics, Security Comments Off on IBBC hosts Members' Retreat at Cumberland Lodge
By John Lee.
Petrofac has announced that it has secured new awards and contract extensions, with a combined value of over US$30 million, to provide training solutions for key National Oil Company and International Oil Company clients in Oman, the UAE and Iraq.
In Iraq, where Petrofac has delivered more than 50,000 in-country delegate training days since 2010, a contract has been renewed to deliver training solutions.
In connection with the UK Serious Fraud Office (SFO)’s ongoing investigation into Petrofac Limited and its subsidiaries (“Petrofac”), on 6 February 2019 David Lufkin, 51, a British national, and previously Global Head of Sales for Petrofac International Limited, pleaded guilty at Westminster Magistrates’ Court to eleven counts of bribery, contrary to sections 1(1) and 1(2) of the Bribery Act 2010.
These offences relate to the making of corrupt offers to influence the award of contracts to Petrofac worth in excess of USD $730 million in Iraq and in excess of USD $3.5 billion in Saudi Arabia.
The charges included the following:
Payments of approximately USD $2.2 million were ultimately made by Petrofac to two agents in respect of a USD $329.7 million Engineering, Procurement and Construction (“EPC”) contract on the Badra oilfield in Iraq (the “Badra Phase One EPC contract”) awarded to Petrofac in February 2012.
Corrupt offers of payments were also made to an agent to influence the award of contract variations to the Badra Phase One EPC contract, and for the extension of the Badra Operations and Maintenance (“O&M”) contract. Petrofac was unsuccessful in obtaining these contracts and no payments were made to the agent.
- Fao [Faw] Terminal, Iraq
Payments of approximately USD $4 million were ultimately made by Petrofac to an agent in respect of an O&M contract on the Fao Terminal project in Iraq (the “Fao Terminal O&M contract”). The Fao Terminal O&M contract, awarded to Petrofac in August 2012, together with yearly extensions awarded in 2013, 2014 and 2015, was worth approximately USD $400 million to Petrofac.
- Saudi Arabia
Payments of approximately USD $45 million were made by Petrofac to its agent in respect of the following contracts awarded to Petrofac in Saudi Arabia, between July 2012 and November 2015:
- Payments of approximately USD $5.8 million were ultimately made by Petrofac to its agent in respect of EPC contracts for the Petro Rabigh Phase II Petrochemical Expansion Project awarded in July 2012 and worth approximately USD $463 million;
- Payments of approximately USD $21.4 million were ultimately made by Petrofac to its agent in respect of EPC contracts for Jazan Refinery and Terminal Project awarded in December 2012 and worth approximately USD $1.7 billion; and
- Payments of approximately USD $19.5 million were ultimately made by Petrofac to its agent in respect of the EPC contract for a sulphur recovery plant as part of the Fadhili Gas Plant Project awarded in November 2015 and worth approximately USD $1.56 billion.
Corrupt offers of payments were also made to its agent for the award of other contracts at the time. Petrofac was unsuccessful in obtaining these contracts and no payments were made to its agent.
David Lufkin will be sentenced at a later date.
The SFO’s investigation into Petrofac’s use of agents in multiple jurisdictions, including Iraq and Saudi Arabia, is ongoing.
Individuals with information potentially relevant to this investigation are encouraged to contact the SFO through our secure and confidential reporting channel. When providing information please quote ‘Petrofac Investigation’. Please note that it would be of particular assistance if you could provide your contact details for any further queries or questions that we may have.
(Source: UK SFO)
Posted in Construction & Engineering In Iraq Comments Off on Petrofac Exec admits Bribes Paid to Win Iraq Contracts