Petrofac benefits from Turkmenistan ambition

Shares in Petrofac continued their strong upward momentum on Thursday after the oil services group emerged as a key beneficiary from Turkmenistan’s latest push to become a chief exporter to Asia and Europe.

The FTSE 100 company on Wednesday landed a contract with Turkmengas, the state energy company, to assist in the development of the South Yoloten gas field, which is one of the biggest in the world.

The deal was one of several that Turkmenistan awarded to international energy companies this week, worth a total of about $9.7bn, according to Reuters.

They come in the wake of an eight-month trade dispute between Turkmenistan and Gazprom, Russia’s state-controlled energy group, which prompted the former Soviet state to find other export routes for its gas. However, earlier this month tension between the two cooled.

Shares in Petrofac, which rallied 1.9 per cent to close at £10.29 on Wednesday, were up a further 1.2 per cent by midday on Thursday in London.

Although only $100m has thus far been booked by Petrofac, the company said that if the client was satisfied with the partnership the contract would move to a “second phase”.

Petrofac has enjoyed a strong order intake over the past year, helping the shares rally three-fold, but bears have been sceptical that the company can keep up the pace.

“This could become the largest ever contract for Petrofac,” said Andrew Dobbing, analyst at Cazenove. “This contract, along with several others that Petrofac is currently bidding on, could drive significant earnings upgrades in Petrofac’s engineering and construction division.”

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