Monday 11 July 2016 11:46 am

Petrofac pulls plug on contract with Malaysian state-owned oil firm Petronas

Petrofac shares popped today after the oilfield services provider scrapped a contract with Malaysia's state-owned oil firm.

Petrofac's Malaysian subsidiary and its partners agreed an early stoppage to the development of the the Beranti gas field, located about 150km offshore Peninsular Malaysia, with Petronas.

Petronas was due to pay Petrofac $357m (£275.4m) for the contract last year, which resulted in a profit of just $1m during this period.

Read more: Oil falls to a two-month low as economic storm clouds gather

The London-listed firm had the right to end it ahead of the expected end date in 2020, depending on the project's economics.

Petronas will repay the capital and operational expenditures owed until June 2017, but Petrofac added it still expects to book a small impairment charge.

The oil service company's shares swelled as much as 5.23 per cent to 795p per share in mid-afternoon trading, before falling back slightly to 790p.

Read more: Petrofac makes a loss as Shetland costs rack up

Petrofac earlier this year launched an investigation following allegations that one of its former vice presidents paid around $2m to secure a large oil deal in Kuwait.

The internal inquiry came after it was suggested Monaco-based Unaoil had paid bribes on behalf of oil companies, including Petrofac.

The company released a statement saying it was “determined” to investigate the claims, which were made after a leak to Melborne-based newspaper The Age.