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Petrofac clinches $700m Russian deal amid deepening fraud woes

Troubled oil services group Petrofac has secured a $700m contract on a major Russian gas project despite the deepening legal woes that threaten to put off future customers.
The contract is Petrofac’s tenth large Russian deal and involves the services provider maintaining a processing facility on Sakhalin Island, an important port for the export of Russian gas on sea tankers.
It is one of few contract wins outside of Oman, where Petrofac has a strong historic relationship, since the group's share price plunged following a double blow to its reputation.
The FTSE 250 group has been engulfed in controversy since the Serious Fraud Office began its probe into the company’s role in the global corruption scandal, which hinged on the dealings of contractor ‘middleman’ Unaoil.
Separately, Ayman Asfari, Petrofac’s long-standing chief executive is fighting his own battle with the Italian authorities, which have imposed sanctions on him amid allegations of insider trading.
Petrofac and Unaoil have both denied any wrongdoing. Meanwhile Mr Asfari has denied charges that he was given inside information by an Italian company, which he used to trade securities.
Petrofac clinches $700m Russian deal amid deepening fraud woes

Ayman Asfari, chief executive officer of Petrofac

Credit:
Chris Ratcliffe/Bloomberg News
The contract  win bolstered the company’s share price. It climbed over 5pc from the previous day’s close to 432p. However, the price is still less than half the company's 940p a share valuation in April this year before the SFO swooped.
This will come as welcome news to the company’s beleaguered shareholders after the company announced a hefty cut to dividends last week.
In order to protect its vulnerable balance sheet Petrofac said the dividend will fall to 12.70 cents a share for the six months to June 30, compared with 22 cents this time last year.
petrofac
Analysts have warned that the company risks losing almost ?2bn in market value if the controversy scuppers its hopes of future contract wins. It also faces a possible $800m (?625m) fine.
Meanwhile rival services group Amec Foster Wheeler has also scored a major contract win ahead of its ?2.2bn takeover by Aberdeen-based Wood Group.
The $640m contract means the company will be working on a $1.8bn methanol plant in the US, owned by a subsidiary of China’s Shandong Yuhuang Chemical Company.
The chemicals contract plays to Wood Group’s strategy of diversifying its portfolio of customers to reduce its heavy reliance on the oil and gas sector.
Shares in both Amec Foster Wheeler and Wood Group rose by over 1pc to 459.70p and 615.50p respectively.
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