x Abu Dhabi, UAEFriday 28 July 2017

Leighton fires Iraq oil export official

Leighton, the Australian construction group, has fired a top official on its oil export project in Iraq over contractual irregularities.

The Australian construction group Leighton has fired a top official on its oil export project in Iraq over contractual irregularities.

The company is building oil export infrastructure near the Iraqi port of Basra through its Leighton Offshore unit, which has become embroiled in a government investigation over alleged tendering violations.

"[The] internal review of the Iraq projects undertaken by its subsidiary, Leighton Offshore, has identified instances of failures to meet governance standards in respect of the proper documentation of contractual arrangements. As a consequence, a senior manager has been dismissed," said Leighton.

In 2010, Leighton won a contract worth US$733 million (Dh2.69 billion) to construct three moorings and lay 120 kilometres of pipeline for Iraq's South Oil Company at the Fao terminal near Basra. A year later, it secured two more contracts worth $597m for further mooring facilities, pipelines and offshore platforms.

In March, Iraq's oil ministry said it had launched an investigation into the tendering process, after suspicions that Leighton had received advance information about the bids submitted by competitors, allowing it to table the lowest price.

"We are currently examining all measures concerning the contracts signed with Leighton," Hilal Ismail, the oil ministry's inspector general, said at the time.

The Basra project is part of Iraq's effort to raise its export capacity to accommodate rising production.

Crude production surpassed 3 million barrels per day (bpd) earlier in the year, and even though ambitious targets of 12 million bpd now seem unlikely, output will continue to climb.

The first two moorings were inaugurated in February, adding about 900,000 bpd in export capacity. When both phases of the project are completed, export capacity at the Fao terminal will be boosted by 1.8 million bpd.

Iraq has no seaborne outlets other than Basra, and the Kirkuk oil terminal in the north is not connected to the southern mega-fields that account for the bulk of Iraq's output.

Leighton has a big regional footprint and in the UAE formed a joint venture with the local contractor Al Habtoor in 2007. Its projects in the Emirates include the Sorbonne University in Abu Dhabi, and the long-delayed Pearl Hotel complex at the foot of the Palm Jumeirah in Dubai.

fneuhof@thenational.ae

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