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Very unlikely that Petrofac will benefit from the LNG boom since that is a sector that PFC have hardly been able to penetrate! Only way they can get an entry into that lucrative business would be by forming a consortium with one of the existing giants and that was admitted by the former CEO during one of the results presentation.
And another one just awarded, but this time to NPCC!
https://www.upstreamonline.com/field-development/adnoc-awards-548-million-contract-for-expansion-of-giant-lower-zakum-field/2-1-1290829
According to Upstream Online ADNOC has almost finalized 2 consortia who will be awarded onshore and offshore packages on the massive re-tendered US$10 billion+ Hail & Ghasha sour gas project. Not sure whether PFC is part of either of the 2 consortia or which of the 5 packages PFC are bidding on. During original tendering PFC had bid in consortium with Samsung on 3 out of 5 packages. Awards expected before year end.
Yes, the SFO investigations into PFC are complete which however is only one half of the story! ADNOC's internal investigations into the dealings on their side are still ongoing. It is also to be noted that the bribes paid in 2013 and 2014 were to 2 different clients - ZADCO (for UZ750 EPC) and ADCO (for Bab Integrated FEED). It is therefore actually 2 separate ongoing investigations. Although ZADCO and ADCO along with a few others is now a single entity - ADNOC.
ADNOC has initiated Phase 3 of the Bab Compression Project. If the ADNOC ban is lifted in time PFC would be the favorites since Phase 2 was executed by them and there would be a lot of synergies. Phase 2 was worth US$500 million in 2013.
DENBY,
I wasn't referring to further investigations of PFC staff! That is all done and dusted as we all know. I was referring to the likelihood of investigations being carried out by the clients of PFC into the conduct of their own staff in view of the wide publicity generated by the SFO cases. If such a process is indeed ongoing then PFC would probably get back on the approved list only after conclusion of those processes. The SFO settlement covers only the PFC half of the matter. Again it is also possible that the clients may turn a blind eye to all the goings-on of the past and reinstate PFC without wasting time. At this moment we simply don't know when PFC will actually get back onto the ADNOC and ARAMCO lists!
No guarantees at all!! Which is why it is of vital importance that the higher management and PR teams of PFC carry out a very thorough, quick, efficient and effective work of cleaning up the mess created by the SFO investigation! While the PFC side can be presented now as a new refreshed outfit we have the opposite client side who did take or agree to take bribes offered by a couple of rogue PFC employees. Obviously there may or may not be ongoing investigations into the involvement of individual/individuals into the relevant cases. This investigation delays could in turn cause harm to PFC since every added day of delay in getting back on the green list allows competitors to walk away with prized contracts!!
2 packages on the Dalma Sour Gas Project that were originally contracted to Petrofac/Sapura by ADNOC last year at approximately US$1.65 billion have now been placed with NPCC of UAE and Spain's Tecnicas Reunidas/Target Engineering of UAE. Revised contract total for the 2 packages is now stated to be US$1.46 billion.
Walttortoise - I concur with RealitBites' observations regarding New Energy opportunities. However I would think Petrofac would also continue to go after their traditional strengths - refinery construction/revamp/upgrades, gas processing plants, field development projects, sulphur handling, petrochemicals etc. Good example is the refinery contract announced recently in Lithuania. They are also likely to have submitted their bid last week for the US$2.6 billion Jordan refinery expansion project perhaps in consortium with a Chinese firm. Also the Kenya South Lokichar field development project for Tullow Oil.
Very unlikely that PFC will get an invite for this new project. Petrofac unfortunately have never been able to enter the lucrative LNG business although it is certainly not for want of trying. Way back in 2007 or 2008 they were actually awarded a contract for an LNG train in Algeria in consortium with an Indonesian outfit when they were L1 bidders. However due to some contractual terms or conditions the provisional contract was cancelled and instead awarded to the L2 ranked bidder. Subsequently PFC have been involved with the LNG business elsewhere only for bits and pieces. Still there is a possibility that PFC might acquire an LNG player or bid as a joint venture partner along with another established LNG player. Ayman Asfari had mentioned this during once of the Q & A sessions after a half or full year results.
@Slift
Yes, reduction in backlog numbers in successive years may look alarming but it should also be noted that the number of employees have reduced from around 19,000 at the end of 2015 to around 10,700 currently! Since PFC have of late repeatedly stated that they intend to right-size their operations into a leaner business setup it might be the the Board's decision to henceforth target only projects up to a certain size and maintain the backlog at a level that can be sufficiently serviced by current employee levels. Considerable bidding expenses would have been incurred on the now "lost" US14 billion ADNOC tenders. PFC were looking good on the retendered $1.5 billion Dalma packages (which they had been awarded last year) as well as being L1 on the $1billion Belbazem offshore project in partnership with NPCC. Also in partnership with Saipem, PFC were L1 on the $1+billion Umm Shaif Gas Cap project. Remains to be seen how ADNOC will proceed with these projects since PFC were bidding in consortium and not alone when the suspension notice was announced. In addition to the above PFC were also bidding with Samsung for the 4 mega packages of the Hail & Ghasha projects with bids approximately totaling US$8 billion. Bidding for mega projects will require more staff and given the much leaner organization that PFC is now, might be one of the reasons for pulling out of the US$4 billion Iraq CSSP recently.
Apart from the $14 billion lost from the bidding pipeline due to the ADNOC suspension, PFC have also lost the major packages of approximately $2 to 3 billion on the HRRL project in India to competition. However smaller packages are still under tendering and PFC should pick up the Sulphur Unit of $200 million. India holding 11% of bidding pipeline. In Uganda PFC is favored to pick up the $1billion+ Kingfisher CPF project and likely to lose the $2billion+ Tilenga project to Mcdermott. The $3billion+ South Lokichar project in Kenya is likely to see FID only in 2022. All of these should be part of the OTHER 12% of bidding pipeline. PFC has also bids in Algeria for a couple of refinery projects totaling $3 to 4 billion and should be a strong favorite with their Korean partner for these. The August 11th 2020 $46billion pipeline should have now shrunk to around $25 to 26 billion unless new bids/proposals have been added since! Kuwait's 8% should hold good promise with the Jurassic Gas project packages likely to be awarded very soon.
The main concern for PFC with the latest charges is that the historic contracts mentioned relate to awards in the UAE where the PFC headquarters is based. Earlier Saudi Arabia and Iraq did not lose time in preventing PFC from participating in new tenders when they were named in the earlier admitted charges. Would the UAE react in the same manner? If yes, PFC will be hurt quite badly since the bulk of the mega-contracts currently in the pipeline are in the UAE!
The main concern for PFC with the latest charges is that the historic contracts mentioned relate to awards in the UAE where the PFC headquarters is based. Earlier Saudi Arabia and Iraq did not lose time in preventing PFC from participating in new tenders when they were named in the earlier admitted charges. Would the UAE react in the same manner? If yes, PFC will be hurt quite badly since the bulk of the mega-contracts currently in the pipeline are in the UAE!
1) CRPO-57 - Unclear
2) CRPO-59 - US$ 50 -100 million
3) CRPO-60 - US$ 165 - 200 million
4) CRPO-61 - US$ 15 - 20 million