After resolving its bribery investigation, the Petrofac (LSE:PFC) share price exploded by 70% in a week late last month. This momentum has since been extended following a newly signed partnership with Gazprom – a global energy company with a 71% market share of gas reserves in Russia. This has pushed the 12-month performance of the stock to almost 50%.
Looking at the details
The strategic agreement between Petrofac and Gazprom is set to last a minimum of five years. The firms will collaborate to accelerate industry standardisation and sustainable development within the Russian energy sector. The goal is to entice international energy companies into the region.
Petrofac’s responsibilities are to define and develop the qualification requirements for local suppliers and manufacturers. Once established, the framework will provide an increased level of clarity for prospective energy developers and ensure regulatory requirements within the Russian Federation are met.
What does this mean for the Petrofac share price?
In the near term, this agreement is unlikely to yield any tangible financial results. However, it does act as a first step towards repairing Petrofac’s reputation. As a reminder, the company pleaded guilty to bribery charges last month. It was fined £77m, and the original leadership team has since been removed.
But over the long term, this deal may boost the share price. Russia is one of the group’s largest growth markets. And by establishing the qualification framework, Petrofac may develop strong relationships with local energy institutions and technology providers that could provide it with a competitive edge moving forward.