petrofac annual report and accounts 2008
annual report  
and accounts 2008
driving
business 
value
petrofac services limited
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at 31 december 2008
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financial calendar
15 may 2009  annual general meeting
22 may 2009  final dividend payment
26 august 2009  interim results announcement
november 2009  interim dividend payment
dates correct at time of print but subject to change
the group’s investor relations website can be found through wwwpetrofaccom
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■
  maintaining and 
improving on high 
safety standards  
 
 
 
■
  leveraging customer 
relationships by 
providing a range of 
services across the life 
cycle of an asset 
■
  generating predictable 
longterm returns from 
a diversified portfolio of 
investments leveraging 
the group’s service 
capabilities in order 
to understand and 
manage better  
the risks involved
■
  focusing on regions 
with major hydrocarbon 
reserves where 
significant capital  
and operational 
expenditures  
are expected
■
  expanding our 
established service 
offering into new 
countries and regions 
■
  assisting customers  
in achieving their  
local content goals  
by accessing incountry 
resources and 
improving the 
competence and 
technical skills of  
local workforces 
■
  improving revenue and 
earnings stability 
through a diversified 
and complementary 
business model 
 
■
  attracting and retaining 
specialists and key 
personnel 
 
■
  identifying acquiring 
integrating and 
developing 
complementary 
businesses where 
appropriate
driving 
business value
petrofac is an international provider of facilities 
solutions to the oil  gas production and processing 
industries by creating innovative commercial models 
to deliver services supporting our people and 
developing longterm relationships we drive  
business value for our shareholders customers  
and employees
we aim to generate sustainable growth in value for  
our shareholders by being the leading international 
provider of facilities solutions to the oil  gas 
processing industry we aim to do this by
shareholder information overview business review corporate social responsibility governance financial statements
49  health safety security environment and 
integrity assurance
51 people
53 community
56 board of directors
58 senior management team
61 corporate governance report
66 directors’ remuneration report
75 statement of directors’ responsibilities
 76  independent auditors’ report
 77   consolidated income statement
 78  consolidated balance sheet
 79   consolidated cash flow statement
 80   consolidated statement of changes in equity
 82   notes to the consolidated financial statements
119  independent auditors’ report petrofac limited
120  company financial statements
132  other financial information
133  shareholder information
 3  financial highlights
 4 at a glance
 6 creating
 8 supporting
10 developing
overview
12 chairman’s statement
14  interview with the group chief executive
18 management structure 
20 operating review
44 financial review
business review corporate social responsibility governance financial statements
1
petrofac annual report 
and accounts 2008 contents delivering 
worldclass results
our results are driven by petrofac people across the 
world creating opportunities supporting our 
customers and developing longterm partnerships 
to drive value for our customers and shareholders
photograph sajaa gas plant sharjah uae
2
petrofac annual report 
and accounts 2008 overview
worldclass results
36
revenue 
us3330m
2007 us2440m
39
ebitda 
us4190m
2007 us3013m
net profit 
us2650m
2007 us1887m
40
53
backlog

us6797m
2007 us4441m
41 
earnings per share diluted
7711 cents per share  
2007 5461 cents per share  
as restated
return on 
capital employed
2007 457  
as restated
527 
five year summary
1
    2008 2007 2006 2005 2004
information not subject to audit     restated restated  restated
revenues
2
    3329536 2440251 1863906 1485472 951530
ebitda
2
    418952 301259 198349 115634 96065
profit for the year
23
    264989 188716 120332 75397 46083
diluted earnings per share cents
2
    7711 5461 3487 2241 1193
total assets    2269821 1748007 1401847 986650 729357
total equity    559031 522970 324904 195127 138558
average number of employees
2
    10383 9027 7482 6598 5284
backlog us millions    3997

 4441 4173 3244 1740
1 in us’000 unless otherwise stated 2 on continuing operations 3 attributable to petrofac limited shareholders

 adjusted to include us28 billion of new contracts awarded between 1 january and 6 march 2009 the date of approval of the 2008 annual report and accounts  
subsequent to 6 march 2009 the group announced a further lumpsum epc award for the el merk project in algeria with a contract value of us22 billion

 not including new contracts awarded subsequent to 31 december 2008
04
05
06
952
1485
1864
07 2440
08 3330
04
05
06
1193
2241
3487
07 5461
08 7711
04
05
06
1740
3244
4173
07 4441
08 3997

04
05
06
961
1156
1983
07 3013
08 4190
04
05
06
461
754
1203
07 1887
08 2650
revenue
us millions
revenue
us millions
eps diluted
cents per share
backlog
us millions
ebitda
us millions
profit
us millions
 as restated 
3
petrofac annual report 
and accounts 2008 financial highlights employee numbers
4900
petrofac is a leading international 
provider of facilities solutions we help 
the world’s integrated independent and 
national oil  gas companies to exploit 
oil  gas resources worldwide
at a glance
engineering  construction
provides conceptual design front end engineering design feed and 
engineering procurement and construction epc of oil  gas plant and 
associated infrastructure
 
2008 highlights include 
■
  the award of two epc contracts in syria worth approximately 
us1 billion for the jihar and ebla gas treatment plants
■
  award of followup work with agip kco on the kashagan 
development in kazakhstan
■
  award of us543 million lumpsum contract to engineer procure 
and construct a 140km gas pipeline to the mina alahmadi refinery 
in kuwait 
■
  establishment of petrofac emirates a joint venture with mubadala 
petroleum services company in abu dhabi
■
  establishment of a joint venture initiative with ikpt in indonesia to 
focus on liquefied natural gas lng projects 
operations services
works with customers through two separate business streams 
petrofac facilities management which provides operational support 
and petrofac training which provides competencybased training for 
customers’ personnel 
 
2008 highlights include 
■
  completion of the first full year of operating dubai government’s 
offshore oil  gas operations
■
  acquisition of eclipse petroleum technology and caltec limited 
to strengthen our technical capability in the area of production 
enhancement
■
  opening of new training centres on sakhalin island in houston  
and also in dubai via a joint venture with dubai petroleum
■
  international expansion of our brownfield capability including  
two new contract awards in abu dhabi 
energy developments
provides the platform through which petrofac invests alongside our 
partners to develop upstream and energy infrastructure projects where 
we can add value through the deployment of the group’s engineering 
and operations skills 
2008 highlights include 
■
  continuing development of the west don and don southwest fields 
in the uk north sea including the modifications to the northern 
producer floating production facility
■
  reaching the milestone of 10 million barrels of oil produced from 
the cendor field offshore peninsula malaysia in september 
■
  commencement of commercial production of gas from the  
chergui field tunisia in august 
employee numbers
5800
employee numbers
400
4
petrofac annual report 
and accounts 2008 overview
we have more than 11000 employees 
operating out of five strategically 
located operational centres in 
aberdeen sharjah woking chennai 
and mumbai and a further 19 offices 
worldwide the predominant focus of 
our business is on the uk continental 
shelf ukcs the middle east africa 
the commonwealth of independent 
states cis and the asia pacific region
petrofac’s range of services meets our 
customers’ needs across the full life 
cycle of oil  gas assets we design 
and build oil  gas facilities operate 
maintain and manage facilities and train 
personnel enhance production and 
where we can leverage our service 
capability develop and coinvest in 
upstream and infrastructure projects 
net profit
us2241m
2007 us137 1m
63
percentage of group profit
81
net profit
us318m
2007 us289m
 1 0
percentage of group profit
11
net profit
us219m
2007 us334m
–34
percentage of group profit
8
revenue
us2219m
2007 us1415m
57 
percentage of group revenue
66
revenue
us982m
2007 us911m
8
percentage of group revenue
29
revenue
us153m
2007 us133m
 15
percentage of group revenue
5
5
petrofac annual report 
and accounts 2008 at a glance creating
tough and hazardous environments demand innovative 
solutions we strive to provide new and better services 
that drive business value for customers from creating 
new technical answers to introducing entrepreneurial 
ways of working including coinvestment and other 
solutions to build competitive advantage – for ourselves 
and our customers
don development uk north sea
we refurbished the northern producer 
floating production facility in order to 
provide an innovative oil export solution 
which reduced offshore activities and 
shortened the project lead time first oil 
is anticipated during the first half of 2009 
photograph ebla syria 
6
petrofac annual report 
and accounts 2008 overview
in salah gas compression project
commercial innovation
demanding schedules acceleration 
of material deliveries and logistical 
constraints are all familiar issues for 
petrofac on fasttrack projects but when 
executed in the unforgiving environment 
of the central saharan desert in algeria 
they are a formidable undertaking what 
differentiates petrofac is our ability to 
handle the challenges by empowerment 
of project management and the sense of 
ownership held by every member of the 
team ensuring we deliver every time 
our innovative commercial solutions 
are designed to meet the needs of our 
customer and the project these range 
from straightforward reimbursable 
arrangements with or without an 
element of performancebased 
income lumpsum turnkey agreements 
to coinvestment with our customers in 
upstream and infrastructure projects
creating
7
petrofac annual report 
and accounts 2008 photograph kittiwake platform north sea
khalda gas processing plant 
salam gas trains 3  4
development of training centres
together with apache we have been 
able to support this project’s local 
community by building and equipping 
two schools for local bedouin children 
in the matrouh area of the western 
desert in egypt during 2009 a further 
two schools will be built reinforcing 
our commitment to supporting the 
communities in which we operate
during the year we opened new 
centres on sakhalin island in houston 
dubai baku and in kuala lumpur in 
addition to taking on the management 
and operational responsibility for the 
chemical process technology centre 
on jurong island singapore
8
petrofac annual report 
and accounts 2008
acquisitions add value
the acquisitions of eclipse and caltec 
which were completed during 2008 
enhance our existing well operations 
expertise and provide us with new and 
valuable capability to deliver projects 
through our production solutions 
business unit on a gainshare or  
quasiequity basis  overview
supporting
we help our customers to achieve their objectives 
whether these are related to timescales costs safety 
environmental factors or production targets supporting 
our people is integral to this goal we help them to be 
safe ethical and costconscious at all times while also 
being a positive force in the communities in which  
we operate
supporting
9
petrofac annual report 
and accounts 2008 developing
developing longterm partnerships enables us
to be responsive to customer needs in the middle 
east and africa many of our current projects
can be traced back to relationships established
in the 1990s our new organisational structure 
implemented in 2009 will ensure that we are more 
tightly focused than ever on delivering results
photograph kauther oman
10
petrofac annual report 
and accounts 2008 overview
koc facilities upgrade project
jihar and ebla gas treatment 
plants syria
chergui tunisia
first gas was produced from the 
chergui field in june 2008 with 
commercial gas sales commencing 
in august 2008 and work is currently 
underway to increase the plant’s 
capacity by 25 this complex project 
demanded the integration of many 
petrofac teams from investment 
through engineering design 
procurement and construction to the 
commissioning and ultimately the 
operation of the plant
in kuwait we are working closely 
with kuwait oil company koc and 
our construction partner kharafi 
national to overcome significant safety 
challenges presented by the upgrade 
of facilities on a complex multilocation 
brownfield project some parts of 
which are 50 years old
we secured two lumpsum 
engineering procurement and 
construction awards for gas treatment 
plants in syria a country where we 
have considerable experience and 
many established relationships
11
petrofac annual report 
and accounts 2008 developing 12
petrofac annual report 
and accounts 2008 business review
market overview
2008 was a year of extraordinary turbulence and uncertainty in the 
global economy fuelled by the crisis in banking and a marked fall 
in confidence the downturn is impacting businesses in most 
sectors worldwide 
the environment in our industry has so far remained broadly 
positive despite extreme volatility in the price of oil which at one 
point during the year rose to us147 per barrel before falling away 
to less than us40 in december continuing supplies of 
reasonablypriced energy will remain fundamental to world 
economic growth for many years to come
our progress
in the past year we experienced strong demand for our services 
our company is in a strong position financially with very little debt 
substantial cash balances and a healthy order book that continues 
to position us very well for the future
petrofac is developing as a public company and now has the 
organisational capability the leadership talent and an expanded 
engineering skills base to compete at the highest level we have 
now joined an exclusive list of companies capable of participating 
in the largest and most challenging projects in our sector  
and executing them with a high degree of technical and  
commercial success
as you will read elsewhere in this report our three divisions – 
engineering  construction operations services and energy 
developments – have all reported significant progress 
this has been achieved through our proven technical capability 
entrepreneurial business attitude and a focus on geographic 
regions where there are programmes of work in place that are not 
as susceptible to factors affecting the global economic environment 
and the cost of production is competitive driving our continued 
competitive advantage is a groupwide commitment to our people 
to the environment and crucially to safety above all other 
considerations 
dividends
the board is recommending a final dividend of 1790 cents per 
ordinary share equivalent to 1257 pence per ordinary share which 
if approved will be paid on 22 may 2009 to eligible shareholders on 
the register at 24 april 2009 given the strong cash generation of 
the group the board has taken the decision to increase the 
percentage of earnings to be distributed by way of dividend to 
approximately 35 of fullyear posttax profits previously 30 
which will continue to be paid approximately onethird as an interim 
dividend and twothirds as a final dividend together with the 
interim dividend of 750 cents equivalent to 409 pence this gives 
a total dividend for the year of 2540 cents per ordinary share an 
increase of 55 over 2007
corporate governance and corporate social responsibility
the board has continued to focus on corporate governance issues 
ensuring that our processes are comparable to those recognised 
as best practice we have also worked hard during the year to meet 
our responsibilities to the wider stakeholder community 
some of the countries in which we operate are facing deepseated 
challenges and we are committed to being a positive force 
wherever possible in practical terms this is frequently expressed 
through an increasing range of community support initiatives where 
our focus is primarily on education and training we believe it is 
extremely important that we play a part in the advancement of the 
people and communities who interact with petrofac in many 
locations young people do not have the opportunity to learn and 
to contribute to the development of their countries from building 
schools to funding scholarships petrofac programmes are helping 
young people fulfil their potential
our people
attracting retaining and developing our people is both an enduring 
strength and an ongoing challenge during the year our numbers 
rose from around 9800
1
 to around 11100 as we continued to 
invest in the technical skills as well as the leadership talent that will 
maintain our marketleading position
we operate in difficult and challenging environments and i extend 
the board’s thanks to all of our employees who worked so tirelessly 
throughout 2008 to execute our projects with great skill and 
intelligence and with an unyielding focus on safety at all times
the board
this has been a year of stability for your board no changes have 
been made to its composition since the 2007 annual general 
meeting held on 16 may 2008
outlook
there is no doubting the severity of the global recession i am 
confident however that our group is well placed to record good 
performance in 2009 our yearend backlog and recent contract 
awards provide a sound operational and financial basis and the 
prospects for the future are excellent 
in order to turn those prospects into performance we will continue 
to work closely with customers shareholders partners and 
suppliers i thank all of these stakeholders for their support in the 
past and look forward to sharing our success with them in 2009 
and beyond
rodney chase
chairman
2008 was another outstanding year for petrofac as we again delivered 
record revenue and profits not only are we maintaining the trend for 
growth but we are now winning business and executing projects of 
significant scale revenue grew by 36 to us3330 million during 
the year and net profits increased by 40 to us2650 million
chairman’s statement
1
 employee numbers include the group’s share of joint venture employees
13
petrofac annual report 
and accounts 2008 chairman’s statement 14
petrofac annual report 
and accounts 2008 business review
2008 was another very successful year for petrofac  
what are the main factors behind this achievement 
i am very proud of our performance during the year which was the 
direct result of the expertise and commitment of our workforce 
around the world our people set themselves the highest standards 
and do their utmost to achieve them at all times and on every 
project we work on 
petrofac has always had an entrepreneurial culture and this is 
something that we strive to maintain we try and do things 
differently and are open to new ideas and new commercial models 
that deliver more value for our customers as well as for our 
shareholders for example we can provide our services through a 
number of commercial formats from straightforward reimbursable 
arrangements with or without an element of performancebased 
income to lumpsum turnkey agreements all the way through to 
coinvesting with our customers in upstream and infrastructure 
projects where that meets their needs and ours
another important factor behind our success is the number of our 
people who own shares in the company and therefore have a 
direct personal interest in delivering longterm and sustainable 
value more than 40 of our shares belong to employees and 
approximately one in five of our employees are either shareholders 
or participate in our share award schemes 
how is the economic downturn impacting on petrofac
triggered by the liquidity crisis in the banking sector the broader 
macroeconomic environment clearly changed very dramatically 
during the second half of 2008 and although governments across 
the world have taken concerted action to support the banking 
system and to stimulate demand confidence remains low and 
the nearterm prospects for the global economy continue to be 
uncertain in response to rapidly falling forecasts of economic 
activity all commodity prices including oil have fallen dramatically 
from the alltime highs hit last year
against this extremely challenging backdrop i am pleased to say 
that petrofac remains in a strong position and although we cannot 
ignore external circumstances i believe we are very wellplaced 
to maintain our growth our geographic focus particularly in the 
middle east and africa where the cost of oil production is relatively 
low the extensive longterm relationships we have established with 
worldclass national and international oil companies and our 
competitive cost structure all put us in a strong competitive  
position as we have shown by our continuing success in winning 
new business 
what have been the key events of 2008
the engineering  construction division continued to execute 
projects with great skill and resourcefulness 2008 saw many 
impressive achievements including the securing of a major 
contract to engineer procure and build a gas pipeline to the mina 
alahmadi refinery in kuwait and new contracts to construct gas 
treatment plants for the ebla and jihar projects in syria
in operations services we completed our first full year of operating 
dubai’s offshore assets while our operations continue to progress 
well sadly a helicopter incident occurred approximately 70 
kilometres off the dubai coast on 3 september 2008 there were 
no petrofac personnel onboard but the two aircrew and five 
passengers who worked for companies contracted to dubai 
petroleum all lost their lives this was a terrible tragedy and the 
investigation by the authorities in dubai to identify the cause is still 
ongoing we work in some challenging environments and incidents 
like this show why the safety of our people and all those impacted 
by our operations is absolutely key to everything we do at petrofac 
during 2008 operations services finalised arrangements to 
provide turnkey operations services on the northern producer the 
floating production facility on the don fields in the north sea which 
are being developed by our energy developments business and 
extended our duty holder contracts with bhp billiton irish sea 
pioneer and venture production kittiwake
energy developments made significant progress with the don fields 
during the year and first oil is expected during the first half of 2009 
in tunisia the commercial export of gas from the chergui plant 
commenced in august we have been able to expand the plant 
capacity by more than 20 and have delivered higher than 
expected productivity from the reservoir as a result we are 
negotiating a revised higher volume gas sales contract with 
the offtaker 
what does the sales pipeline look like for 2009 and beyond 
it continues to look very good indeed our customers especially 
those in our key geographies of the middle east and north africa 
are making longterm decisions based on relatively low longrange 
forecasts for oil prices so far in 2009 we have secured contract 
awards of around us28 billion see page 32
looking at the mediumterm where and how do you expect 
petrofac to grow 
for the last five years we have achieved very healthy growth in 
revenue in excess of 35 per annum and i believe we can maintain 
good growth over the mediumterm considering the strength of 
our backlog and the visibility this gives to our earnings
we will retain our focus on the middle east and africa the 
commonwealth of independent states the uk continental shelf 
ukcs and the asia pacific region these are areas where we have 
a wealth of established relationships and a proven track record 
we will continue to grow organically as well as through selective 
acquisitions that add depth and breadth to our capability
petrofac’s group chief executive ayman asfari comments on 
the progress made by the company during 2008 and its plans 
for the future
interview with the group chief executive
 subsequent to the approval of the 2008 annual report and accounts by the 
directors on 6 march 2009 the group announced a further lumpsum epc 
award for the el merk project in algeria with a contract value of us22 billion 
this takes the total of the group’s new contract awards in 2009 to us50 billion
15
petrofac annual report 
and accounts 2008
interview with the  
group chief executive what is the rationale behind the recent restructuring
the new organisational structure that was implemented on 
1 january 2009 will be the basis for growth in the mediumterm 
a key driver for our current success has been our differentiated 
offering in the marketplace and it is important that we build on this 
model by promoting collaboration and cooperation between our 
various business units
following extensive debate among the executive team and senior 
management throughout 2008 it became clear that we needed to 
evolve our structure in order to improve integration and create a 
broader platform for growth the new structure is outlined in detail 
on pages 18 and 19
how would you summarise the year and the outlook
overall 2008 was an excellent year for petrofac our backlog 
continued geographic focus new structure and strong bidding 
pipeline combined with the commitment and dedication of our 
people around the world are the foundations for what i believe 
will be a very successful future
ayman asfari
group chief executive
in what way will the strategy develop over the short to 
mediumterm 
our strategy is clear and unchanged we will maintain our focus on 
oil  gas while also broadening our capability into areas such as 
offshore engineering and liquefied natural gas as well as expanding 
our geographic footprint into markets including saudi arabia and 
west africa
this strategy is delivering tremendous opportunities for organic 
growth however at the same time we will continue to look for 
acquisitions that fit with our strategic objectives caltec and eclipse 
came into the group in 2008 and i am pleased to say that both are 
adding valuable depth to the services we provide to our customers 
and have improved our capability to deliver projects through the 
production solutions business unit using a gainshare model
partnership will also remain a key element in the strategy the year 
saw us form joint ventures in indonesia with ikpt and in abu dhabi 
with mubadala petroleum services company 
are you making progress on providing more integrated 
capabilities to projects
many customers are keen to access a wider range of our services 
on specific projects and we have continued to work hard to 
integrate our capabilities more closely
there are numerous examples of our three divisions working 
together to deliver benefits to customers for example at the 
chergui gas plant in tunisia we are not only coinvesting thereby 
sharing the risk and aligning ourselves with our customer’s 
interests but we have also provided engineering design 
procurement and build expertise and are currently supporting the 
ongoing operations 
through production solutions a new business unit created by our 
recent restructuring we are now extending the group’s offering  
by packaging our services and delivering them to customers  
on a quasiequity or gainshare basis where our returns are 
directly related to the value added to the customer through 
enhanced production
interview with the group chief 
executive continued
16
petrofac annual report 
and accounts 2008 business review
1
 northern producer don field
2
   ebla syria 
3 4
 chergui tunisia
1
4
3
2
17
petrofac annual report 
and accounts 2008
interview with the  
group chief executive group chief executive’s committee
management structure
1 january 2009
subramanian sarma  
managing director 
engineering  
construction
from our headquarters in sharjah 
uae and with support from several 
other regional engineering offices 
engineering  construction 
provides tailored and integrated 
engineering procurement and 
construction epc solutions for 
onshore projects while adhering 
to strict principles of safety and 
quality of design we provide 
project execution services through 
a variety of contracting models to 
suit the individual requirements of 
the customer and the projects with 
most of our current portfolio of 
projects being undertaken on a 
lumpsum turnkey basis
marwan chedid  
managing director 
engineering  
construction ventures
as part of our value offering to 
customers engineering  
construction ventures has 
established strategic companies 
and joint ventures with 
complementary organisations in 
order to drive growth in new 
markets and across new product 
lines already adding value to 
petrofac’s suite of services the 
three key elements of engineering 
 construction ventures are
■  
petrofac emirates – a joint venture 
with mubadala petroleum services 
company in abu dhabi
■  
petrofac ikpt – a joint venture 
with indonesia’s ikpt pursuing 
lng opportunities
■  
petrofac saudi arabia
rajesh verma  
managing director 
engineering services
drawing on extensive engineering 
construction procurement and 
operations experience our 
engineering services blend 
practical experience with the latest 
advances in technical innovation 
across conceptual front end 
engineering and detailed design 
with a pool of resources that 
includes a full range of discipline 
engineers and specialists we work 
closely with our customers to 
establish project teams with the 
optimum combination of skills and 
experience our aim is to ensure 
that the best development solution 
is identified in order to provide 
maximum value to our customers
ayman asfari 
group chief executive
robin pinchbeck  
group director of strategy 
and corporate development
maroun semaan 
group chief operating  
officer
executive members of the petrofac limited board
18
petrofac annual report 
and accounts 2008 business review
bill dunnett  
managing director  
offshore engineering  
 operations
leigh howarth  
managing director  
petrofac training
gordon east  
managing director  
production solutions
rob jewkes 
managing director  evp  
project development  
operations 
energy developments
at the end of 2008 we announced a restructuring within our 
group which took effect on 1 january 2009 the structure has 
been created to improve integration and provide a platform for 
future growth our services are now delivered through seven 
business units five of which are led by maroun semaan as 
group chief operating officer and the other two by amjad 
bseisu chief executive energy developments 
we provide a full range of services 
including operations management 
offshore engineering construction 
and maintenance 
■  
brownfield – provides engineering 
 construction modifications for 
brownfield sites and through 
atlantic resourcing provides an 
international recruitment and 
selection service
■  
operations management – offers 
a variety of facilities management 
solutions for both on and offshore 
installations 
■  
offshore engineering  projects 
– delivers project management 
and engineering services to the 
offshore and subsea 
development market
we have capabilities in three core 
areas the provision of 
competenceled training services 
consultancy services to identify or 
assess competency gaps or risks 
within an organisation and 
outsourced tailored management 
solutions our integrated approach 
to training and competence 
enables our customers to achieve 
competent safer and more efficient 
workforces with a global footprint 
we operate or manage a total of 16 
training centres in eight countries 
and annually train more than 
50000 individuals in the areas of 
safety technical operations and 
emergency response while 
managing the training requirements 
for many thousands more on behalf 
of our customers 
we offer our customers a 
singlepoint of access to a wide 
range of production improvement 
services provided under 
valuealigned commercial 
structures our specialist engineers 
and consultants use innovative 
technologies combined with 
knowledge and experience to help 
improve production profitability 
operational efficiency asset 
integrity and the recovery of 
marginal reserves our specialist 
service providers eclipse caltec 
iperform spd and plant asset 
management enable us to provide 
services either independently or as 
part of a wider integrated service
we coinvest in oil  gas 
production processing and 
transportation assets leveraging 
the extensive engineering and 
operations capability of the 
petrofac group to better 
understand and help mitigate 
development risks and enhance 
project returns in complete 
alignment with our partners  
our energy infrastructure and 
upstream teams bring considerable 
technical operational commercial 
and asset management skills 
backed by the strong financial 
resources of the group 
richard milne  
group director of legal  
and commercial affairs
keith roberts 
chief financial officer
amjad bseisu 
chief executive 
energy developments
group chief executive’s committee
19
petrofac annual report 
and accounts 2008 management structure operating  
review
the group’s range of services provides a total solution to 
meeting customers’ needs across the full life cycle of oil  
gas facilities petrofac’s successful track record spans 
more than 25 years and several hundred projects and 
is firmly based on a partnership approach a total 
commitment to health and safety and respect and 
responsibility for the communities in which it operates
photograph mesaieed complex qatar
20
petrofac annual report 
and accounts 2008 business review
petrofac aims to generate sustainable growth in  
value for its shareholders by leveraging its core 
competencies being the ability to engineer build  
and operate oil  gas infrastructure and the ability  
to create and deliver valueadding investments  
 
this means
strategy
respecting the environment 
and being sensitive to the 
communities in which the  
group works
promoting and rewarding  
on merit 
working to worldclass 
standards
focusing always on 
customer satisfaction
21
petrofac annual report 
and accounts 2008 operating review maintaining and improving on high safety standards
 petrofac operates in some difficult and hazardous environments 
 ■
and the safety of the group’s people is paramount at all times 
 in 2008 the group’s employees and subcontractors completed 
 ■
67 million manhours 2007 60 million of activity the group’s 
recordable incident frequency rate was 032 per 200000 
manhours 2007 035 for the sixth year in a row this frequency 
rate has reduced the group’s lost time injury frequency rate was 
003 2007 007 which compares well with industry published 
data however further action is being taken to continue to improve 
performance
 the group’s health and safety performance is reviewed in full on 
 ■
pages 49 and 50 in the corporate social responsibility report
leveraging customer relationships by providing a range of 
services across the life cycle of an asset
 the group is increasingly focused on the provision of an 
 ■
integrated service which was a major driver of its recent group 
reorganisation see pages 18 and 19 for details for example
–  in tunisia the chergui gas plant in which energy developments 
has a 45 operated interest achieved first gas in june 2008 
less than 18 months from investing in the project the project 
required the completion of a partbuilt gas plant on kerkennah 
island and construction of a 60km pipeline approximately half 
of which is beneath the sea the engineering  construction 
division projectmanaged the completion of the pipeline  
and facilities while the operations services division  
provided emergency response and health and safety  
training commissioned the plant and is now operating the 
completed development
–  in the ukcs the group’s businesses are working together to 
bring the don southwest and west don projects onstream 
through energy developments the group has a 60 interest 
in don southwest and a 28 interest in west don in january 
2008 energy developments announced that it had signed an 
agreement as operator on behalf of itself and its coventurers 
for the provision of the northern producer floating production 
facility modifications to the northern producer were carried out 
during the year to refurbish and extend the life of the vessel 
which was safely moored on location in november 2008 the 
operations services division will provide operations services 
and will be the duty holder for the northern producer the 
engineering  construction division continues to manage the 
subsea infrastructure scope the don projects remain on 
budget and on schedule to achieve first oil during the first half 
of 2009
generating predictable longterm returns from a diversified 
portfolio of investments leveraging the group’s service 
capabilities in order to understand and manage better the 
risks involved
 the energy developments division provides the platform through 
 ■
which customers can access the group’s services under 
innovative commercial structures that ensure complete alignment 
the division delivers investment support on upstream and 
infrastructure projects where the group is providing engineering 
and construction or operations services through being a hands
on investor the group is able to better understand and manage 
the risks involved and therefore earn a differentiated return
 energy developments continues to appraise a number of 
 ■
upstream and energy infrastructure opportunities the group has 
a strong balance sheet and is well placed to take advantage of 
any appropriate opportunities that may arise from the current 
operating environment
 details of energy developments’ existing portfolio are included on 
 ■
pages 36 and 37
focusing on regions with major hydrocarbon reserves 
where significant capital and operational expenditures  
are expected
 the group remains focused on its key markets of the ukcs the 
 ■
middle east and africa the commonwealth of independent states 
particularly the caspian region and the asia pacific regions
 while there are many attractive opportunities in other regions 
 ■
these key areas account for approximately 70 of the world’s 
proven oil reserves and 85 of its gas reserves
1
 and significant 
capital and operational expenditures are expected to be focused 
in these regions the group considers there to be more than 
enough opportunities in its core markets to underpin its medium 
to longterm growth plans
expanding petrofac’s established service offering into new 
countries and regions
 as noted in the 2007 annual report saudi arabia was identified 
 ■
as a potentially significant market for the engineering  
construction division over the medium to longterm the division 
was actively bidding for projects in the kingdom during 2008 and 
was awarded a project with saudi aramco in early 2009 for the 
utilities and cogeneration package for the karan gas development 
the division has established a subsidiary inkingdom and aims 
to develop a longterm engineering and project management 
capability in the kingdom
 in september 2008 the engineering  construction division 
 ■
announced the establishment of petrofac emirates a joint venture 
with mubadala petroleum services company llc a wholly 
owned subsidiary of mubadala development company petrofac 
emirates will be based in abu dhabi and will provide a full range 
of engineering design procurement and construction services for 
onshore oil  gas refining and petrochemical projects throughout 
the united arab emirates selected management and engineering 
staff from the engineering  construction division in sharjah will 
be assigned to the joint venture in order to help establish its initial 
business structure and operating procedures with a strong 
bidding pipeline of opportunities in abu dhabi the division 
expects to have a worldclass engineering centre in abu dhabi 
with several hundred fulltime staff within the next few years
 in january 2009 the engineering  construction division 
 ■
announced a us23 billion award with abu dhabi company for 
onshore oil operations adco see page 32 which will help the 
division to establish what it hopes will be a longterm and 
successful business in the emirate
strategy continued
petrofac aims to achieve this goal 
through nine key strategic 
initiatives progress during the  
year against these initiatives is  
outlined below
1  as per the energy information administration of the us department of energy 
as at 9 february 2009 oil reserves include 173 billion barrels of canadian oil 
sand reserves
22
petrofac annual report 
and accounts 2008 business review
05  
expanding 
petrofac’s 
established  
service offering  
into new countries 
and regions
01  
maintaining and 
improving on high  
safety standards
09  
developing 
complementary 
businesses
06  
assisting customers  
in achieving their local 
content goals
02  
leveraging  
customer  
relationships
08  
attracting and 
retaining specialists 
and key personnel
07  
 improving revenue 
and earnings 
stability 
03  
generating 
predictable  
longterm returns 
from a diversified 
portfolio of 
investments
04  
focusing on  
regions with major 
hydrocarbon 
reserves
23
petrofac annual report 
and accounts 2008 operating review assisting customers in achieving their local content goals 
by increasing the use of local resources and improving the 
competence and technical skills of national workforces
 a key factor in the delivery of strong execution performance is the 
 ■
group’s engagement with local resources through recruiting in 
the local market and establishing longterm relationships with 
local subcontractors particularly construction subcontractors 
these relationships increase the local content on projects and 
ensure that the group operates responsibly through improving the 
competence and skills of local workforces
 petrofac training plays an important role in developing the 
 ■
competence and technical skills of national workforces during 
the year petrofac training continued to expand the international 
delivery of its competenceled training services including the 
opening of a new technical training centre on sakhalin island 
the opening of a health and safety and major emergency 
management training centre in houston securing a contract for 
a minimum of three years to manage the chemical process 
technology centre cptc in singapore and establishing the 
dubai petroleum training centre dptc a joint venture with 
dubai petroleum the training business now manages 16 training 
facilities in eight countries
improving revenue and earnings stability through a 
diversified and complementary business model
 the majority of the group’s largescale engineering procurement 
 ■
and construction epc contracts are executed on a lumpsum 
basis though the construction elements of these contracts may 
alternatively be undertaken on a reimbursable or fee basis 
construction management largescale epc contracts typically 
take two to three years to complete
 operations maintenance and training services and conceptual 
 ■
frontend and offshore engineering services are typically delivered 
on a costplusreimbursable basis however a growing 
contribution from these services is linked to the achievement of 
key performance indicators kpis many of these contracts are 
longterm typically three to five years and in the case of the 
group’s operations management for example duty holder 
contracts are often lifeoffield
 through energy developments the group is prepared selectively 
 ■
to invest its own capital alongside that of its customers and 
partners and in so doing ensure complete alignment with the 
objectives of a development such exposure to the risks as well 
as rewards of a development’s performance can be structured in 
a number of ways including quasiequity structures or direct 
equity investments
attracting and retaining recognised specialists and key 
personnelmanaging succession issues
 although skilled personnel have been in unprecedented demand 
 ■
the group has been successful in growing its employee base from 
approximately 9800 at 31 december 2007 to approximately 
11100 at 31 december 2008
 the majority of the growth has been in the engineering  
 ■
construction division where employee numbers have increased 
to approximately 4900 31 december 2007 3900
1
 the group 
has achieved this strong growth through
–  accessing international labour markets including through 
graduate recruitment in particular in the middle east the indian 
subcontinent and asia for example
•  the group opened a new office in chennai in april 2007 to 
support the engineering  construction division which now 
has over 450 employees and is considering further new office 
locations in india
•  in early 2008 the engineering  construction division agreed 
to establish a joint venture with ikpt an indonesian 
engineering and construction company the joint venture will 
provide project management engineering procurement and 
construction management services for oil gas and 
petrochemical projects outside indonesia
–  the management of employee attrition by focusing on 
promoting and rewarding on merit expanding employee share 
ownership see page 51 for details the group’s commitment to 
training its involvement in worldclass projects and exciting 
prospects for continued growth
 the group has taken steps to broaden the group’s senior 
 ■
management which is critical to the group’s plans for further 
growth one such appointment during the year was the new 
position of group head of human resources hr who will assist 
the group in further developing its hr strategy including timely 
consideration of succession management
 going forward the group may look to benefit from any softening 
 ■
in the recruitment market as a result of the recent change in the 
general business environment particularly in engineering  
construction where the division may look to increase headcount 
particularly in relation to its construction management capability
 as noted on page 34 and below the group made two acquisitions 
 ■
during the year which while not adding a large number of 
employees brought highly skilled production engineering and 
technology specialists into the group
identifying acquiring integrating and developing 
complementary businesses where appropriate
 as well as strong organic growth the group has a history 
 ■
of broadening its capability through the acquisition of 
complementary businesses
 in july 2008 the group completed the acquisition of eclipse 
 ■
petroleum technology limited eclipse a production engineering 
specialist for an initial consideration of £7 million eclipse’s 
lifeoffield services include field development production 
modelling and optimisation well lifecycle risk management and 
petroleum engineering functional consulting
 in august 2008 the group completed the acquisition of caltec 
 ■
limited caltec for an initial consideration of £15 million caltec is 
a specialist production technology company with products aimed 
at the enhancement of production from mature fields these 
include the wellcom system which boosts production flowrates by 
splitting and separately boosting the components of multiphase 
flows and the isep system which separates gas and liquids 
utilising only the energy from the incoming process stream
 these recent acquisitions complement the well construction and 
 ■
well management services provided by spd group which was 
acquired in january 2007 and along with other existing group 
businesses will offer the group’s customers significant 
production recovery and longevity improvements particularly  
for mature fields as part of the newly formed production 
solutions business
strategy continued
 1 including the group’s share of around 100 joint venture employees
24
petrofac annual report 
and accounts 2008 business review
1
  mechanical services centre dubai
2
   en route to cendor mopu offshore facility 
malaysia
1
2
25
petrofac annual report 
and accounts 2008 operating review key performance indicators
to help the group assess its performance the board and 
executive management set annual kpi targets and monitor 
and assess performance against these benchmarks on a 
monthly basis throughout the year throughout this business 
review performance is assessed with reference to these 
kpis the annual measures of which are presented here
return on capital employed roce
roce is a measure of the efficiency with which  
the group is generating operating profits from  
its capital
roce is calculated as ebita earnings before interest 
tax amortisation and impairment charges calculated 
as ebitda less depreciation per note 3 to the financial 
statements divided by average capital employed 
being total equity and noncurrent liabilities per the 
consolidated balance sheet
revenue
measures the level of operating activity and 
growth of the business
revenue for the year as reported in the 
consolidated income statement
lost time injury and recordable injury 
frequency rates
provides a measure of the safety performance of 
the group including partners
lost time injury lti and recordable injury ri frequency 
rates are measured on the basis of reported lti and ri 
statistics for all petrofac companies subcontractors and 
partners expressed as a frequency rate per 200000 
man hours

06 457
07 457
08 527
us millions
06 1864
07 2440
08 3330
lost time injury 
rates per 200000 man hours
recordable injury  
rates per 200000 man hours
06 041
07 035
08 032
06 006
07 007
08 003
as restated
26
petrofac annual report 
and accounts 2008 business review
ebitda
ebitda means earnings before interest tax 
depreciation amortisation and impairment and 
provides a measure of the operating profitability 
of the business
ebitda is calculated as profit before tax and net finance 
income as per the consolidated income statement 
adjusted to add back charges for depreciation 
amortisation and impairment charges as per note 3  
to the financial statements
earnings per share diluted eps
eps provides a measure of net profitability of the 
group taking into account changes in the capital 
structure for example the issuance of additional 
share capital
as reported in the consolidated income statement and 
calculated in accordance with note 7 to the financial 
statements
backlog
the group uses this kpi as a measure of the 
visibility of future earnings
backlog consists of the estimated revenue attributable 
to the uncompleted portion of lumpsum engineering 
procurement and construction contracts and variation 
orders plus with regard to engineering services and 
facilities management contracts the estimated revenue 
attributable to the lesser of the remaining term of 
the contract and in the case of lifeoffield facilities 
management contracts five years backlog is not an 
audited measure other companies in the oil  gas 
industry may calculate this measure differently
cash generated from operations  
and cash conversion
these kpis measure both the absolute amount of 
cash generated from operations and the conversion 
of ebitda to cash
cash generated from operations is as per the 
consolidated cash flow statement cash conversion 
is cash from operations divided by ebitda
employee numbers
provides an indication of the group’s service 
capacity
for the purposes of the annual report employee 
numbers include agency contract staff and the 
group’s share of joint venture employees in previous 
years the annual report has excluded the group’s 
share of joint venture employees however these may 
become material following joint venture relationships 
established during the year
number of employees 
approximately
06 8100
07 9800
08 11100
us millions
06 4173
07 4441
08 3997

us millions
06 3286
07 3716
08 5657
06 1657
07 1233
08 1350
us millions
06 1983
07 3013
08 4190
cents per share
06 3487
07 5461
08 7711
net profit
provides a measure of the net profitability of the 
business that is profits available for distribution 
before taking into account minority interests
profit for the year as reported in the consolidated 
income statement
us millions
06 1203
07 1887
08 2650
as restated
27
petrofac annual report 
and accounts 2008 operating review there are a number of risks and uncertainties which may 
have an impact on the accuracy of forwardlooking 
statements the financial performance of the group and 
its share price these are explained below along with the 
approach to managing the risk or uncertainty
the list below does not purport to be exhaustive there may be 
other risks and uncertainties not presently known to the group or 
that the group currently deems to be immaterial that could affect 
the performance of the business 
operational risk
performance of contracts 
the group’s financial performance could be materially affected by 
the performance of a relatively small number of large contracts 
particularly those which are lumpsum furthermore the group’s 
operational performance is important in maintaining its reputation 
for successful project delivery the group has a strong trackrecord 
of successful project execution which reflects its rigorous approach 
to risk identification and mitigation from tender through to project 
completion an internal control framework which exists to ensure 
that the quality schedule and budget of projects is regularly 
reviewed the progress made on key projects is formally reported 
to the board and senior management on a regular basis as 
regards financial performance the group does not recognise  
profits in the early stages of lumpsum contracts and maintains 
contingencies to cover any estimated excess of contract costs over 
related revenues 
loss of essential executive or project staff
the availability of skilled personnel remains one of the most 
significant challenges facing the oil  gas industry the group 
remains confident that its efforts to promote and reward on merit 
targeted employee share ownership management and technician 
training programmes and recruitment strategies access to 
international labour markets in particular the middle east indian 
subcontinent and asia involvement in worldclass projects and 
exciting prospects for continued growth will enable the group to 
attract and retain the necessary skilled personnel to undertake its 
projects in hand the availability of skilled personnel may ease over 
the shortterm due to the recent change in economic conditions 
and the group will assess opportunities to increase headcount 
where appropriate
health safety and environmental performance
petrofac’s strong culture of health safety and environmental hse 
awareness is central to its operational and business activities and is 
vital to the group’s system of business management and integral to 
delivery of quality and business excellence particularly as the 
group enters new geographical markets sometimes with new 
customers and partners and assumes responsibility for new 
infrastructure it is imperative that its focus on hse is maintained 
the group’s financial exposure to a significant hse incident is 
generally mitigated through its commercial arrangements and 
insurance programme though an incident may have a financial 
impact on the group’s kpi income the group’s main exposure to 
such an incident is the reputational risk
business continuity
the group is potentially exposed to inter alia natural hazards acts 
of terrorism war and civil unrest that could impact its infrastructure 
either through the unavailability of physical assets or access to 
systems and procedures the group mitigates this risk through its 
business continuity plan which seeks to minimise disruption from 
any such threat in part by ensuring that alternative systems and 
facilities are available
regulatorycompliance risk
breach of legal or regulatory code
the group recognises the potential financial and reputational risk 
that could result from a failure in its system of internal controls 
particularly with respect to hse employment law taxation listing 
rules ethical standards bribery corruption and fraud as noted in 
the corporate governance report on pages 61 to 65 the group 
operates a number of policies and procedures to address these 
risks including a recently revised code of business conduct
market risk
level of demand for the group’s services 
the demand for the group’s services is linked to the level of 
expenditure by the oil  gas industry however as noted in the 
section ‘operating environment’ while there is some shortterm 
uncertainty due to the wider economic climate the group expects 
the demand for its services to remain robust over the longterm the 
group’s recent success in securing new and substantial contract 
awards gives it good visibility of revenues through to 2011
key risks and uncertainties
28
petrofac annual report 
and accounts 2008 business review
change of political social or economic factors in key regions
petrofac and its predecessor companies have more than 25 years 
of experience of working in international markets a detailed risk 
review process is undertaken when assessing whether the group 
should enter into a new contract or country which is designed to 
ensure that key risks are identified and monitored and appropriate 
mitigating actions taken the group remains exposed to country
specific risks such as a change in taxation regime however the 
diversity of the group’s geographical footprint the commercial 
terms of its contracts and where considered appropriate its 
insurance framework all mitigate against countryspecific risks 
cost inflation
while the majority of the costs of operations and engineering 
services contracts are reimbursed by customers either on an 
actual cost basis or through a periodically revised schedule of 
rates the group’s largest exposure to cost inflation is in its provision 
of lumpsum engineering  construction services these exposures 
are managed before and after bid submission as follows
 conditional on the award of a major contract the group will typically 
 ■
negotiate agreements to procure equipment andor arrangements 
with key subcontractors on backtoback terms where possible
 expectations of wage inflation are factored into project costings 
 ■
for bid submissions and budgets
 the group maintains contingencies to cover unforeseen  
 ■
cost increases
the exposure to increases in capital expenditure costs associated 
with energy developments’ projects is managed in a similar 
manner to engineering  construction lumpsum projects
exchange rates
while the group operates in a number of diverse geographical 
locations the majority of its revenues are denominated in us 
dollars or currencies pegged to the us dollar in contracts priced in 
us dollars or currencies pegged to the us dollar where the group 
is procuring equipment or incurring costs in other currencies these 
exposures are actively managed at a project level using forward 
currency contracts the bulk of the operations services division’s 
revenues and costs are denominated in sterling however as a 
policy the group does not hedge the sterling profits generated by 
these activities as they are substantially matched by sterling group 
overhead costs while the group reports its results in us dollars its 
share price is quoted in sterling the share price may therefore be 
impacted by changes to the us dollarsterling exchange rate 
1  that is contracts where the group takes full responsibility for managing a 
customer’s asset and is responsible for the safety case of the asset reporting 
to the department of energy and climate change
oil price
longterm expectations of the price of oil  gas may have an 
impact on the level of new investment in the industry and may 
therefore affect demand for the group’s services however the 
service divisions should not be significantly impacted by shortterm 
fluctuations in the oil price see ‘operating environment’ the 
financial performance of the energy developments division is more 
heavily leveraged to the price of oil  gas through its coinvestment 
in upstream oil  gas assets where oil price risk exists for 
example on the cendor project where the division benefits from 
approximately 30 of the upside of the oil price above an agreed 
base price the group will look to hedge an appropriate proportion 
of the exposure typically between 50 and 75 of its lower 
estimate of forecast production the group will not consider 
hedging until an asset has achieved steadystate production
credit risk
given the recent change in economic conditions there is an 
increased risk of counterparties defaulting on payment terms the 
group receives advance payments on the majority of its lumpsum 
contracts which generally have positive cash flow profiles over the 
duration of the contract this gives the group added protection in 
the unlikely event that a customer seeks to cancel or dispute the 
terms of a contract in the operations services division duty 
holder contracts
1
 are generally neutrallyfunded in general 
services provided by the group are critical to ensure that customers 
continue production and consequently customers are likely to 
honour payment terms in the energy developments division 
remuneration is from oil  gas sales to a range of customers 
including national oil companies nocs who are generally 
wellfunded nonetheless the group continues to regularly monitor 
its receivable balances and take appropriate action where necessary
with respect to credit risk arising from other financial assets the 
group regularly monitors its exposures and ensures that its financial 
assets are spread across a large number of creditworthy financial 
institutions
further analysis of credit risk and other financial risks associated 
with or managed through the use of financial instruments such as 
interest rate and liquidity risk are disclosed in note 31 to the 
financial statements
29
petrofac annual report 
and accounts 2008 operating review longterm drivers remain robust
despite recent events which have led to a downturn in expectations 
for short to mediumterm growth rates for the global economy  
the longterm factors that drive demand for the group’s services 
remain robust
while there is expected to be a decline in the global demand for oil 
 gas in 2009 compared to 2008
1
 the international energy agency 
iea estimates that global demand for oil will increase by 25 from 
current levels of around 85 million barrels per day bpd to around 
106 million bpd by 2030
2
 while global demand for gas is expected 
to increase by just over 50 from around 49 million bpd of oil 
equivalent to 74 million bpd of oil equivalent over the same period 
population growth and increasing energy intensity particularly in 
countries such as china and india and to a lesser extent in the 
middle east are expected to drive the majority of this increase
on the supply side the iea estimates that mature production will 
decline by around 9
3
 per annum without intervention even with 
intervention to arrest the decline the iea estimates that depletion 
rates are running at around 65 per annum broadly equivalent to 
losing the existing production of saudi arabia every two years
therefore over the longterm significant investment is required  
to replace existing production and to build new capacity
4
 
consequently demand for the group’s engineering  construction 
services is expected to remain robust over the longterm
sharp fall in oil price creates uncertainty over timing of 
capital expenditures
the recent change in global economic conditions has resulted in 
a significant fall in the oil price as weakening demand has resulted 
in excess production capacity with more uncertain economic 
conditions difficult access to funding a lower oil price and more 
importantly uncertainty regarding future expectations of the oil 
price some upstream oil  gas projects have been subject to 
cancellation or postponement the majority of project 
cancellations however have been in highcost production areas 
which are not focus areas for the group such as canadian oil 
sands or deepwater developments it would seem likely given the 
longterm drivers outlined above that these projects will still 
proceed at some point in the future albeit the timing may be less 
certain even where projects are economic at lower oil prices there 
is evidence that customers have postponed capital expenditure 
decisions as they adjust to the recent change in economic 
conditions and try to benefit from lower external supplier costs
the group’s core markets for its engineering  construction 
business are in areas where development and production costs are 
generally lower than average such as onshore developments in the 
middle east and africa the group expects that the majority of key 
strategic projects in these regions will progress as customers take 
a longterm view on the economic outlook and the oil price  
in particular many nocs in the region are wellfinanced and  
do not have to address the challenges faced by international oil 
companies iocs in allocating funds between capital expenditure 
programmes and paying dividends to shareholders nocs remain 
important customers for the group though it should also be 
recognised that iocs often partner with nocs on major projects 
nonetheless the group considers that its exposure to nocs and to 
lowercost developments positions it well furthermore the group’s 
recent engineering  construction awards provide good visibility of 
revenues for 2009 and 2010 and consequently of equal focus for 
the coming months is continuing the group’s excellent trackrecord 
of project execution 
operational expenditures expected to remain robust
approximately 29 of the group’s revenue in 2008 was generated 
by the operations services division where activities are principally 
focused in the ukcs and the uae operating expenditures are 
generally expected to remain robust as the group expects to 
maintain services to its customers as they continue to operate their 
facilities should customers take a view on longterm oil  gas 
prices such that continued production is considered uneconomic 
they may decide to cease production however this could lead to 
opportunities for the group to provide services in relation to 
readyforshutdown and decommissioning activities the group 
does not consider this to be a likely scenario in the shortterm  
the group’s businesses that are more reliant upon customers’ 
discretionary spend such as parts of training and some of the 
group’s consultancy businesses are expected to face a more 
challenging environment over the next few months
opportunities for energy developments
with more challenging access to debt and equity markets 
a number of smaller independent oil companies may face 
difficulties in obtaining the funding they require to complete 
developments with its strong balance sheet this may give the 
group through its energy developments division opportunities to 
invest in development assets and to provide services to bring 
development projects onstream
conclusion
notwithstanding current economic conditions the group considers 
itself well positioned the group has a strong balance sheet with 
more than us550 million of net cash at 31 december 2008 and 
expects to be able to fund its continued growth plans from cash 
generated by the business the geographic areas in which the 
group’s engineering  construction services are focused should 
ensure that its longterm prospects remain robust in the short to 
mediumterm the group’s recent awards provide good visibility of 
revenues through to 2011
operating environment
1  from 857 million bpd in 2008 to 847 million bpd in 2009 international energy 
agency ‘oil market report’ 11 february 2009
2 international energy agency ‘world energy outlook 2008’ november 2008
3  for postpeak fields international energy agency ‘world energy outlook 
2008’ november 2008
4  the iea estimates that in total us118 trillion in 2007 terms requires to be 
spent on oil  gas infrastructure over the period 20072030 ‘world energy 
outlook 2008’ november 2008
30
petrofac annual report 
and accounts 2008 business review
100
80
60
40
20
0
2030 2008
oil production and demand mbpd new production 
by 2030 new production capacity of more than 70 of the existing base will be required to meet demand
source compiled from iea data world energy outlook 2008 
existing production
demand expected to grow 16 per year
forecast demand growth and supply decline
energy intensity by region
cost structure of existing production
   oil consumption 
 2006 oil demand population per capita 
 mbblsyear millions bbls
north america 9100 450 20
europe 5200 540 10
oecd 17300 1190 15
middle east 2200 190 12
china 2600 1320 2
india 1000 1130 1
24
cisasia pacific
24
europe
52
middle east and africa
2008 revenue by geographic region
120
100
80
60
40
20
0
0 100 90 80 60 70 50 40 30 20 10
16 roce wti price  per boe
hydrocarbon liquids – millions of barrels per day
unconventional reinvestment
with subsidies
core petrofac markets
major oils today
gulf opec
marginal cost of supply –
less efﬁcient oil sands
traditional reinvestment
deep water and some oil sands
curve likely to move to left as mature ﬁelds deplete
source credit suisse research 2008 arrow oval and italicised text added
31
petrofac annual report 
and accounts 2008 operating review engineering  construction
the engineering  construction division achieved strong 
growth and continued to deliver good operational 
performance during the year order intake in 2008 totalled 
in excess of us20 billion and the division has continued to 
be active in bidding activity on a number of other prospects 
which has resulted in securing a further us28 billion of 
new contract awards since the year end
middle east and north africa
the division made good progress on its current portfolio of 
contracts in the middle east and north africa including
 mobilisation activities detailed engineering and early construction 
 ■
work on the in salah gas compression project in algeria for 
sonatrach bp and statoilhydro which was awarded in late 2007
 further progress on the harweel cluster development project for 
 ■
petroleum development oman pdo which is scheduled for 
completion around the end of 2009
 significant progress on the salam and hasdrubal gas plants in 
 ■
egypt and tunisia for khalda petroleum and bg group 
respectively which are both scheduled for completion in the first 
half of 2009
 substantial completion of the kuwait oil company koc facilities 
 ■
upgrade project in kuwait
furthermore the division secured three new epc awards in the 
region during the year
jihar gas plant syria
in march 2008 the division was awarded a us454 million 
lumpsum epc contract to build the jihar gas treatment plant 
for the hayan petroleum company a joint venture between the 
stateowned syrian petroleum company and ina industrija nafte 
ddnaftaplin of croatia which is scheduled to be delivered in the 
first quarter of 2011
ebla gas plant syria
in april 2008 the division secured a further award in syria for the 
us556 million including variation orders for novated items 
received shortly after award lumpsum epc contract to build the 
ebla gas treatment plant for petrocanada which is expected to be 
completed in the first half of 2010 
mina alahmadi refinery pipelines kuwait
in november 2008 the division announced that it had been 
awarded a us543 million lumpsum epc contract by the kuwait 
oil company koc the contract is for a new gas pipeline running 
from koc’s booster station 131 in north kuwait to its liquefied 
petroleum gas plant located at the mina alahmadi refinery 
the project is expected to run for 21 months
commonwealth of independent states
the division continues to be involved on both the kashagan and 
karachaganak programmes two of kazakhstan’s multibillion dollar 
multiphase developments progress during the year included
 on the karachaganak development the division has largely 
 ■
completed the engineering and procurement contract and has 
undertaken early works under the construction management 
contract for the fourth stabilisation and sweetening train which 
was awarded in january 2007
 also on the karachaganak development the division has 
 ■
commenced the fourth stage of the phase iii development feed 
study the division’s largest feed study to date following bg 
group and kazmunaigas’s review of alternative phasing of the full 
phase iii capital commitment the division expects to continue to 
provide reimbursable services well into 2009 albeit with a 
reduced number of personnel
 on the kashagan project the construction management contract 
 ■
in relation to the oil gas and sulphur processing facilities which 
was awarded in january 2006 has been extended for a further 
12 months to the end of 2009 with a further 12month option
 substantial progress was made on the engineering procurement 
 ■
and construction management contract for the kashagan third oil 
train awarded in late 2007
 the feed study for the kharyaga development awarded in late 
 ■
2007 has been substantially completed
the division secured a further epc award in the region during 
the year
kashagan fourth sales gas compressor train and 
debottlenecking modifications kazakhstan
in april 2008 the division secured further work on the kashagan 
field development project with the award of a lumpsum scope 
us105 million project and a us10 million optional scope to 
engineer and procure a fourth sales gas compressor train within 
the kashagan gas and liquefied petroleum gas lpg plant and 
undertake debottlenecking modifications to tranches 1 and 2 of the 
gas treatment plant the project is necessary to accommodate the 
additional gas associated with the processing of the production 
from the third oil train
since the end of 2008 the division has been successful in securing 
the following new awards
asab field development abu dhabi
in january 2009 the division secured its largest contract to date 
with the award of a us23 billion contract with abu dhabi 
company for onshore oil operations adco for the development 
of the onshore asab oil field under the 44month lumpsum 
contract the division will provide epc services to upgrade the 
production capacity of the asab field upgrade the facility’s 
capacity to accept increased production from other fields and 
upgrade the associated utilities and water handling facilities
karan utilities and cogeneration package saudi arabia
in february 2009 the division was awarded an epc contract for 
saudi aramco’s karan utilities and cogeneration package the 
project forms part of the karan gas development programme which 
will expand the khursaniyah gas plant in the eastern province of 
saudi arabia to accommodate around 18 billion standard cubic 
feet per day of high pressure sour gas from the offshore karan field 
the division will also upgrade the plant’s process controls 
electrical systems and support facilities
results
the engineering  construction division achieved strong revenue 
growth in the year due to high levels of activity on the division’s 
lumpsum epc projects in hand at the beginning of the year and on 
new projects secured during the year revenue increased by 569 
to us22194 million 2007 us14149 million net margin 
increased to 101 2007 97 as the division continued its strong 
execution performance the strong growth in revenue and net 
margin improvement led to an increase in net profit of 635 to 
us2241 million 2007 us1371 million the main contributors to 
revenue in the lumpsum epc business were the ebla gas plant in 
syria the harweel project in oman the hasdrubal gas plant in 
review of operations
 subsequent to the approval of the 2008 annual report and accounts by the 
directors on 6 march 2009 the group announced a further lumpsum epc 
award for the el merk project in algeria with a contract value of us22 billion 
this takes the total of the group’s new contract awards in 2009 to us50 billion
32
petrofac annual report 
and accounts 2008 business review
tunisia the in salah gas compression project in algeria the third  
oil and fourth sales gas compressor trains on the kashagan 
development in kazakhstan the karachaganak fourth stabilisation 
and sweetening train in kazakhstan and the salam gas plant 
in egypt 
during the year the engineering  construction division grew its 
headcount by approximately 1000 to approximately 4900 at 
31 december 2008 31 december 2007 3900 due to a significant 
increase in the number of employees across the division’s project 
sites and the addition of more than 250 personnel in the chennai 
office which opened in april 2007 and now has approximately 
450 employees
the division’s backlog was us24 billion at 31 december 2008 
31 december 2007 us25 billion and a further us28 billion 
of contracts have been added to backlog to date in 2009
1 2
ebla syria 
3
   kashagan kazakhstan
3 1
2
engineering  construction revenue
us millions
06 10813
07 14149
08 22194
engineering  construction net profit 
margin

06 88
07 97
08 101
engineering  construction backlog
us millions
06 2228
07 2540
08 2408
33
petrofac annual report 
and accounts 2008 operating review acquisitions
in july 2008 the division completed the acquisition of eclipse 
petroleum technology limited eclipse a production engineering 
specialist for an initial consideration of £7 million further 
consideration in cash and shares will be determined by the level 
of future profitability of eclipse which could increase the total 
consideration up to a maximum of £16 million eclipse was founded 
in 1999 and has approximately 50 employees operating from five 
offices worldwide aberdeen london stavanger houston and 
dubai its lifeoffield services include field development 
production modelling and optimisation well lifecycle risk 
management and petroleum engineering functional consulting
in august 2008 the division completed the acquisition of caltec 
limited caltec a specialist production technology company  
for an initial consideration of £15 million further consideration  
in cash and shares will be determined by the achievement of 
agreed milestones with the total consideration being capped at 
£30 million caltec was founded in 2003 after some years as a  
part of the british hydromechanics research group limited an 
independent private company with close ties to cranfield university 
the company has approximately 20 members of staff operating 
from both cranfield and aberdeen its technologies include a 
number of products aimed at the production enhancement of 
mature fields including the wellcom system which boosts 
production flowrates by lowering wellhead pressures and the  
isep system which allows the partial separation of water from  
high watercut production streams in combination these systems 
are capable of significant production recovery and longevity 
improvements for mature fields
these acquisitions complement the division’s well operations 
management business spd acquired in january 2007 and will 
combine with spd and other existing businesses to further 
broaden the group’s capability which now extends from the 
management of surface facilities and well operations to the ability 
to deliver solutions that enhance and improve production particularly 
in mature fields going forward these businesses will form the 
foundations of the new production solutions business unit see 
pages 18 and 19
results
revenue for the operations services division increased to 
us9824 million 2007 us9110 million an increase of 78 
revenue excluding “passthrough” revenue
1
 increased by 33 
though on a constantcurrency basis the increase was approximately 
11
2
 primarily due to a full year contribution from the dubai 
petroleum contract strong growth in spd new training facilities 
operated by petrofac training the opening of a mechanical service 
centre in the jebel ali free zone in the united arab emirates and 
the contribution from the newly acquired eclipse and caltec 
businesses net profit increased by 101 to us318 million
3
 
2007 us289 million representing a net margin on revenue 
excluding passthrough revenue of 45 2007 42 the 
underlying net margin adjusted to eliminate amortisation of 
intangible assets and finance costs relating to deferred consideration 
increased to 51 2007 47 due principally to improved margins 
in the facilities management business in the uk and internationally 
which more than offset slower than anticipated buildup in activity 
in some of the new training facilities opened during the year where 
the business model is more highly operationally geared
operations services’ employee numbers grew to approximately 
5800 at 31 december 2008 31 december 2007 5500
the division’s backlog was us16 billion at 31 december 2008 
2007 us19 billion however the majority of the division’s 
backlog is denominated in sterling and on a constant currency 
basis at 31 december 2007 exchange rates increased marginally 
to us20 billion
operations services
during the year the operations services division continued 
to make good progress on its current portfolio of projects 
secured an additional duty holder contract for the northern 
producer floating production facility and established a 
number of new training centres the acquisition of a 
production engineering company and a technology 
company in the second half of the year will position the 
group in conjunction with a number of its existing 
businesses to deliver solutions that enhance and improve 
production for its customers particularly in mature fields
dubai petroleum
the division’s largest project is the dubai petroleum service operator 
contract which commenced in april 2007 the core contract 
continues to progress well with particular focus on production 
efficiency and integrity and there were significant levels of brownfield 
engineering and drilling activity during the year furthermore the 
dubai petroleum training centre dptc a joint venture between 
petrofac training and dubai petroleum was formally opened at the 
end of august 2008 the dptc is fully equipped to meet the 
technical safety training needs of the energy sector throughout the 
middle east and supports a full calendar of courses
other facilities management
in june 2008 the facilities management business was awarded a 
duty holder contract to provide turnkey operations services for the 
northern producer the floating production facility for the petrofac 
energy developmentsoperated don fields in the uk north sea 
see page 36 the contract is worth approximately us30 million 
per annum the northern producer is well known to the operations 
services division as it marked the commencement of the division’s 
pioneering duty holder model on the galley field more than ten 
years ago latterly for talisman before the facility was demobilised 
from the field in late 2007 the facilities management business was 
successful in securing a twoyear extension of its duty holder 
contract with venture production for the kittiwake platform 
effective from november 2008 and with bhp billiton for the irish 
sea pioneer to the end of 2009
in addition to work with dubai petroleum the brownfield 
engineering business secured a number of new awards during 
2008 including followon work with venture production in the 
greater kittiwake area and internationally in abu dhabi and 
tunisia brownfield engineering has now developed the capability 
to undertake largerscale international projects
petrofac training
in addition to the dubai petroleum training centre referred to 
above petrofac training has continued to expand the international 
delivery of its training services including the opening of a new 
technical training centre on sakhalin island a health and safety and 
major emergency management training centre in houston a major 
emergency management facility in kuala lumpur and a new 
safety training centre in baku azerbaijan furthermore in june 
2008 petrofac training secured a contract for a minimum of three 
years to manage the chemical process technology centre cptc 
in singapore the cptc is a worldclass training centre owned by 
the economic development board of singapore with facilities 
which include a fullscale hydrocarbon processing plant and 
specialist equipment laboratories which facilitates operations and 
maintenance training including startup shutdown and emergency 
response exercises petrofac training now manages 16 training 
facilities in eight countries
review of operations continued
34
petrofac annual report 
and accounts 2008 business review
1
  dubai petroleum training centre 
2
  northern producer don field
1  passthrough revenue refers to the revenue recognised from low or zero
margin thirdparty procurement services provided to customers
2  the majority of the operations services division’s revenues are denominated in 
sterling the average us dollar to sterling exchange rate for 2008 was 185 
compared to 201 in 2007
3  on a constant currency basis at 31 december 2007 exchange rates net profit 
would have increased by 228 to us355 million note that the majority of 
the division’s net profits are earned in the second half of the year due to the 
timing of recognition of incentive income
operations services revenue
us millions
06 7292
07 9110
08 9824
operations services net profit margin 
excluding passthrough revenue

06 36
07 42
08 45
operations services backlog
us millions
06 1945
07 1901
08 1589
1
2
35
petrofac annual report 
and accounts 2008 operating review review of operations continued
of the agreement the division agreed to share the costs to 
complete the central production facility pipeline to shore and 
associated infrastructure which was managed by the 
engineering  construction division the operations services 
division commissioned the plant and now operates the facility 
on behalf of the division
first gas was achieved in june 2008 15 months after first 
access to the site following completion of the export pipeline 
the commercial export of gas commenced in august 2008 with 
the facility reaching and maintaining production near its 
nameplate capacity of 20 million standard cubic feet per day 
mmscfd shortly thereafter produced gas is sold to the national 
gas company société tunisienne d’electricité et gaz steg 
under a gas pricing formula fixed by existing law in which the 
price of gas is linked to freeonboard mediterranean fob med 
fuel oil prices
following commissioning of a new refrigeration unit in early 
2009 the plant capacity has been increased by over 20 as a 
result it is anticipated the division will negotiate a revised 
higher volume gas sales contract with the offtaker in addition 
the division is currently undertaking seismic work to assess 
further development of the chergui field
assets under development
don southwest and west don ukcs
in the ukcs petrofac energy developments as operator and 
on behalf of its coventurers is managing the development of 
the don fields field development programme fdp approval 
was received from the department of business enterprise and 
regulatory reform now under the remit of the department of 
energy and climate change for the don southwest petrofac 
interest 600 and west don petrofac interest 277 fields in 
may 2008 a key component of the fdp is the northern 
producer floating production facility which the division secured 
on a tariff basis from sea production limited a wholly owned 
subsidiary of northern offshore limited in january 2008
the northern producer contract has an innovative commercial 
arrangement such that the division as operator will pay a 
variable tariff linked to the oil price which will range from a 
minimum of us2 per barrel if brent is us30 or less to a 
maximum of us6 per barrel if brent is us90 or more the 
northern producer has a capacity of 55000 barrels of oil per 
day and associated gas compression water injection and 
export processing facilities a major campaign of fatigue life 
enhancement works and equipment refurbishment was 
undertaken on the northern producer which together with the 
development of the subsea infrastructure was managed with 
the assistance of the group’s service divisions 
the drilling programme commenced in august 2008 with the 
arrival of the john shaw semisubmersible drilling rig a second 
drilling rig the stena spey is being mobilised in the first quarter 
of 2009 to enable the drilling schedule to be maintained despite 
unfavourable weather conditions first oil from the west don 
and don southwest fields remains on target with the original 
schedule with both expected to start production during the first 
half of 2009 the development remains on budget
the division expects that both the west don and don 
southwest fields would generate a positive return at current 
oil prices
the division’s estimate of proven reserves net entitlement for 
the don southwest and west don developments is 122 million 
barrels 2007 122 million barrels while its estimate of proven 
and probable reserves net entitlement is 222 million barrels 
2007 236 million barrels the minor revision is due principally 
to a lower oil price assumption following the recent change in 
economic conditions there is further development potential in 
energy developments
the energy developments division’s portfolio of developed 
assets continued to perform well throughout the year and 
now includes the chergui gas plant in tunisia which was 
completed and produced first gas during the year in 
addition the division made substantial progress on the don 
development which is scheduled to commence production 
during the first half of 2009 analysis of the division’s oil  
gas reserve entitlements is presented on page 132
developed assets
cendor pm304 malaysia
the division is operator and has a 30 interest in the production 
sharing contract psc for the cendor field in block pm304 
offshore peninsular malaysia the other partners to the production 
sharing contract psc are petronas carigali petrovietnam ep 
and kuwait foreign petroleum exploration company kufpec 
the cendor field averaged production of approximately 14700 
barrels per day during the year 2007 14300 and achieved 
production uptime of over 99
development of the conceptual design work for the second phase 
of the cendor field is progressing with a final investment decision 
expected during the second half of 2009 as part of the 
assessment of a second phase an appraisal drilling programme 
was recently undertaken which has yielded promising results
ohanet algeria
the division in joint venture with bhp billiton as joint venture 
operator japan ohanet oil  gas co and woodside energy 
algeria has invested in excess of us100 million for a 10 share 
in a risk service contract rsc with sonatrach algeria’s national 
oil company the engineering  construction division undertook 
the epc contract for the gas processing facilities in joint venture 
with abb lummus and the operations services division was 
responsible for part of the onsite commissioning works first gas 
for export began flowing in late 2003 
the plant continued to perform well in 2008 overall production 
was broadly comparable to the prior year at an average of 
approximately 147000 bpd of oil equivalent 2007 153500 bpd of 
oil equivalent on average the division earned its share of the 
monthly liquids production by the 7th day of the month 2007 8th 
reflecting higher average oil  gas prices
1
 it is expected that the 
division will earn its defined return by november 2011 at which 
point the contract will terminate
kpc refinery kyrgyzstan
the division owns a 50 share in the kyrgyz petroleum company 
kpc which is engaged in the refining of crude oil and the 
marketing of oil products from the kpc refinery the operations 
services division operates the refinery on behalf of the joint venture 
partners on a reimbursable basis during 2008 the 10000 bpd 
capacity refinery performed ahead of expectations with improved 
access to feedstock and increased export demand producing an 
average of approximately 2800 bpd 2007 2500 bpd of principally 
gasoline diesel and fuel oil 
chergui field tunisia
in february 2007 the division completed its acquisition of a 45 
operated interest in the chergui concession from entreprise 
tunisienne d’activités pétrolières etap the tunisian national oil 
company which holds the remaining 55 interest under the terms 
1  for example brent a benchmark crude oil averaged us97 per barrel for 
2008 2007 us72 per barrel
36
petrofac annual report 
and accounts 2008 business review
the greater don area where the division has interests in blocks 
21117 21118 and 21118c 
permit ntp68 australia
energy developments entered into a farmin arrangement with 
meo australia limited meo in june 2007 under the terms of 
the farmin the division is to fund 25 subject to a cap of the 
heron2 and heron3 wells in return for a 10 interest in permit 
ntp68 the division also has an option to secure an interest in 
any lng or methanol project that forms part of the 
development
the heron2 well was drilled in late 2007 and following 
disappointing results which gave rise to uncertainties 
surrounding the commercial outcome an impairment provision 
of us87 million was made at 31 december 2007 the partners 
continue to review the options for the heron3 appraisal well and 
the commerciality of an lng or methanol project which could 
depend upon the proving of reserves by other operators in the 
area following a further impairment review of the carrying value 
of the asset which indicated a wide range of potential 
commercial outcomes a further impairment provision of us50 
million was made at 31 december 2008 the carrying value of 
the asset is now us48 million
other
in april 2008 the division announced in conjunction with the 
engineering  construction division’s award of the lumpsum 
epc contract for the ebla gas plant in syria see page 32 that it 
had an opportunity to acquire a 10 equity interest in the ebla 
development after a thorough review of the opportunity the 
division decided not to invest in the development
in addition to the prospects noted above the division reviewed and 
continues to review several upstream and energy infrastructure 
opportunities
results
divisional revenue increased to us1534 million 2007 us1328 
million due to the commencement of exports from the chergui gas 
plant and improved performance at the kpc refinery revenue from 
the cendor field and the ohanet gas plant was broadly in line with 
2007 despite the impact of higher average oil prices under the 
terms of the cendor psc the division only benefits from 30 of the 
upside above the base oil price
1
 and there was lower cost oil 
recovery in 2008 than in the prior year during which the balance of 
the initial cost of the development was recovered under the terms 
of the ohanet rsc the division’s return is capped upon earning its 
share of monthly liquids production
net profit for the year was us219 million 2007 us334 million 
after
 a us82 million charge in relation to a currency hedge for capital 
 ■
expenditure on the don area development which while being an 
economic hedge has been deemed an ineffective cash flow 
hedge under international accounting standard 39 ‘financial 
instruments recognition and measurement’
 an impairment provision of us35 million us50 million less a 
 ■
tax credit of us15 million against the division’s investment in 
permit ntp68 
 costs of us49 million us98 million less a tax credit of us49 
 ■
million in relation to the unsuccessful prospero well in the greater 
don area
adjusting for these nonrecurring items net profit for the year was 
us385 million 2007 us308 million after adjusting for an 
impairment provision of us87 million against the division’s 
investment in permit ntp68 and the recognition of a net tax asset 
of us113 million in relation to the trigger of a ring fence trade 
allowing ukcs pretrading expenditure to be recognised as a 
deferred tax asset and the recognition of a net tax asset in relation 
to ntp68 expenditure overall the net profit contribution from 
cendor and ohanet was broadly consistent with 2007 while the 
increase in adjusted net profit was driven by commencement of the 
chergui project and improved performance at the kpc refinery 
1
  john shaw drilling rig don field
2
   cendor mopu malaysia
2 1
1 the base price for 2008 averaged approximately us37 per barrel
energy developments ebitda
us millions
06 401
07 828
08 891
energy developments net profit
us millions
06 144
07 334
08 219
37
petrofac annual report 
and accounts 2008 operating review extreme weather conditions  
limited infrastructure 
getting onsite is the first challenge
38
petrofac annual report 
and accounts 2008 business review
the caspian region is one of the most 
important oil  gas producing areas  
in the world it also poses some  
of our industry’s most significant 
environmental and logistical challenges 
at karachaganak in western kazakhstan 
close to the russian border we are 
currently working on our largest front 
end engineering and design feed 
project to date on a remote site with 
facilities spread over an area the size of 
central london the karachaganak 
project will be faced with significant 
challenges including limited 
infrastructure sour gas and extremely 
low temperatures
ultimately karachaganak could see 
a significant number of construction 
workers on site to meet their needs 
largescale infrastructure upgrades  
will have to be undertaken in addition  
to the construction of dedicated 
accommodation and a power station  
we are also exploring the use of  
special tentlike heated habitats under 
which work can be carried out while 
protecting the teams from the extreme 
weather conditions
karachaganak caspian region 
as existing easily accessible fields deplete and oil  gas become progressively  
more difficult to extract producers have to maintain their focus on reserves in  
the world’s more hostile and remote locations – environments where petrofac  
has proven capabilities
39
petrofac annual report 
and accounts 2008 operating review just what was needed 
on an icy windswept 
sea a trusted friend
40
petrofac annual report 
and accounts 2008 business review
northern producer uk north sea 
at petrofac we have a track record of bringing unconventional thinking to projects in 
order to overcome logistical and technical challenges in the harshest environments
the innovative decision to use the 
northern producer floating production 
facility rather than a host platform on 
the don development in the uk north 
sea has reduced the amount of offshore 
work involved in the project saving 
costs and improving safety previously 
employed on talisman’s galley field the 
northern producer was refurbished and 
upgraded for the don development and 
successfully moored in position towards 
the end of 2008 following a 48 hour 
journey to the field from the cromarty 
firth the refurbishment involved vessel 
life extension maintenance upgrades 
and donspecific enhancements 
the west don and don southwest fields 
are being developed by petrofac in 
partnership with valiant petroleum  
first oil stratic energy and nippon oil 
through our facilities management 
business we were awarded a duty 
holder contract to provide turnkey 
operations services for the northern 
producer by the vessel’s owner sea 
production limited first oil is 
anticipated during the first half of 2009
41
petrofac annual report 
and accounts 2008 operating review fast track execution in  
a remote location  
1100 contractors to train 
22 months to first gas
42
petrofac annual report 
and accounts 2008 business review
ebla gas plant syria 
we are committed to ensuring that we have trained people able to work safely at all 
times – even when we are working to the most demanding timescales
at the ebla gas treatment plant in syria 
our team is working with local 
construction contractors to deliver 
a complex project to a demanding 
production schedule there is no 
compromise in safety despite a remote 
mountainous location and temperatures 
that range from 14ºc at night to 45ºc 
at midday
under the guidance of our onsite team 
and supported by additional petrofac 
people in sharjah and mumbai the 
contractor workforce of around 1100 
has undertaken extensive training in 
hsse and jobspecific skills with our 
customer seeking production within 
22 months from the award of the 
contract we were also tasked with 
major procurement and logistics issues 
key items of equipment were air
freighted with vendors incentivised and 
assisted to streamline and speed the 
delivery process
ebla is currently on schedule with first 
gas anticipated in 2010 at the time of 
publication the team had worked more 
than 25 million manhours without a 
lost time incident
43
petrofac annual report 
and accounts 2008 operating review revenue
group revenue increased by 364 to us33295 million 2007 
us24403 million due to growth in all three divisions but primarily 
due to strong growth in the engineering  construction division 
which accounted for approximately twothirds of the group’s 
revenue the increase in the engineering  construction division 
was as a result of high levels of activity on ongoing lumpsum epc 
contracts including new projects awarded during the year
operating profit
group operating profit increased by 431 to us3556 million 
2007 us2485 million and operating margins increased to 107 
2007 102 operations services and energy developments 
operating profit increased marginally though operations services 
operating margins were marginally lower due to an increase in the 
proportion of passthrough revenue
3
 while energy developments 
operating margins were lower due to an impairment charge  
against energy developments’ interest in permit ntp68 and  
costs in relation to the unsuccessful prospero well in the greater 
don area the engineering  construction operating profit 
increased by 681 to us2659 million 2007 us1582 million 
due to strong growth in activity levels and continued excellent 
operational performance
net profit
net profit increased to us2650 million for the year ended 
31 december 2008 31 december 2007 us1887 million an 
increase of 404 driven primarily by strong growth and margin 
improvement in the engineering  construction division the net 
margin for the group increased to 80 2007 77 broadly in line 
with the increase in the group’s operating margin
ebitda
ebitda increased to us4190 million 2007 us3013 million 
representing an ebitda margin of 126 2007 123 the 
engineering  construction division ebitda margin increased 
on the back of strong operational performance which more than 
offset a marginal decrease in the operations services division due 
to an increase in the proportion of passthrough revenue and in the 
energy developments division due in part to the terms of the 
cendor psc
financial review 
results for the year
 revenue operating profit
1
 net profit
2
 ebitda
    
us million 2008 2007 2008 2007 2008 2007 2008 2007
engineering  construction 22194 14149 2659 1582 2241 1371 2851 1739
operations services 9824 9110 467 449 318 289 538 512
energy developments 1534 1328 517 516 219 334 891 828
corporate consolidation  
  elimination 257 184 87 62 128 107 90 66
total 33295 24403 3556 2485 2650 1887 4190 3013
 revenue growth operating margin net margin ebitda margin
    
growthmargin analysis 2008 2007 2008 2007 2008 2007 2008 2007
engineering  construction 569 309 120 112 101 97 128 123
operations services 78 249 48 49 32 32 55 56
energy developments 155 1138 337 389 143 251 581 623
total 364 309 107 102 80 77 126 123
1 profit from operations before tax and finance costs
2 attributable to petrofac limited shareholders
3 passthrough revenue increased to 281 of operations services revenue in 2008 2007 249
revenue
us millions
operating profit
us millions
net profit
us millions
net profit margin

06 1864
07 2440
08 3330
06 1695
07 2485
08 3556
06 1203
07 1887
08 2650
06 65
07 77
08 80
44
petrofac annual report 
and accounts 2008 business review
while ebitda increased marginally in operations services and 
energy developments it increased by 639 in engineering  
construction due to the division’s excellent operational 
performance consequently the engineering  construction 
division’s share of group ebitda excluding the effect of corporate 
consolidation and elimination adjustments increased to 666 
2007 565 while the operations services and energy 
developments decreased to 126 2007 166 and 208  
2007 269 respectively
backlog
the group’s combined backlog at 31 december 2008 was 
approximately us40 billion 31 december 2007 us44 billion 
a significant proportion of the operations services division’s 
backlog is denominated in sterling which depreciated significantly 
against the us dollar during the second half of 2008 on a 
constantcurrency basis the group’s backlog remained broadly 
comparable with the prior year while not included in the yearend 
backlog a further us28 billion of new contracts have been 
secured to date in 2009
exchange rates
the group’s reporting currency is us dollars during the second 
half of 2008 there was a significant depreciation of sterling against 
the us dollar and there was therefore a significant impact on the 
reported results of the group’s uk trading activities principally 
within the operations services division the impact on the results 
of the operations services division is discussed further on pages 
34 and 35 the table below sets out the average and yearend 
exchange rates for the us dollar and sterling for the years ended 
31 december 2008 and 2007 as used by the group for financial 
reporting purposes 
interest 
net finance income excluding finance charges in relation to hedges 
deemed ineffective under ias 39 for the year was us109 million 
2007 us97 million due principally to the group’s higher average 
cash balances during 2008 
taxation
an analysis of the income tax charge is set out in note 6 to the 
financial statements the income tax charge as a percentage of 
profit before tax in 2008 was lower at 261 2007 269 the 
marginal decrease in the effective tax rate compared to the prior 
year is due principally to 
 the engineering  construction division contributing a greater 
 ■
proportion of the group’s profit leading to a higher proportion of 
the group’s profits being earned in lower tax jurisdictions which 
more than offset
 an increase in the effective tax rate for the energy developments 
 ■
division due to the recognition in 2007 of a deferred tax asset in 
relation to ukcs pretrading expenditure and no tax relief being 
available in the current year on a charge in relation to a cash flow 
hedge deemed ineffective under ias 39
earnings per share
fully diluted earnings per share increased from 5461 cents per 
share in 2007 as restated to 7711 cents in 2008 an increase of 
412 reflecting the group’s significant increase in profitability 
in 2008
financial reporting exchange rates
ussterling 2008 2007
average rate for the year 185 201
yearend rate 146 199
2008 ebitda by division
1 engineering  construction 666
2 operations services 126
3 energy developments 208
ebitda
us millions
06 1983
07 3013
08 4190
ebitda margin

06 106
07 123
08 126
backlog
us billions
06 42
07 44
08 40
 subsequent to the approval of the 2008 annual report and accounts by the 
directors on 6 march 2009 the group announced a further lumpsum epc 
award for the el merk project in algeria with a contract value of us22 billion 
this takes the total of the group’s new contract awards in 2009 to us50 billion
earnings per share fully diluted
us cents
06 3487
07 5461
08 7711
as restated
45
petrofac annual report 
and accounts 2008 financial review operating cash flow and liquidity
cash generated from operations was us5657 million 2007 
restated us3716 million representing 1350 of ebitda 2007 
restated 1233 the increase in net cash inflows was due 
principally to the increase in operating profit during the year and a 
reduction in net working capital utilisation the movement in net 
working capital arose principally from timing differences at the year 
end in respect of the customer billing and supplier payment 
positions on longterm engineering and construction contracts
the group increased its levels of interestbearing loans and 
borrowings to us1426 million 2007 us1101 million resulting 
in an increase in the group’s gross gearing ratio to 255 at 
31 december 2008 2007 211 the group continues to hold 
significant net cash balances
the group’s total gross borrowings before associated debt 
acquisition costs at the end of 2008 were us1480 million 2007 
us1124 million of which 459 was denominated in us dollars 
2007 393 518 was denominated in sterling 2007 553 
and the majority of the balance 23 was denominated in kuwaiti 
dinars 2007 53
as detailed in note 31 to the financial statements the group 
maintained a balanced borrowing profile with 368 of borrowings 
maturing within one year and 632 maturing between one and five 
years 2007 253 545 and 202 maturing in more than five 
years the decrease in the average duration of borrowings reflects 
the existing repayment terms of the group’s facilities with the royal 
bank of scotlandhalifax bank of scotland and an increase in  
the group’s overdraft facilities to manage its working capital 
requirements the borrowings repayable within one year include 
us453 million of bank overdrafts and revolving credit facilities 
representing 306 of total gross borrowings see note 31 to the 
financial statements which are expected to be renewed during 
2009 in the normal course of business 2007 us222 million and 
197 of total gross borrowings
the group’s policy is to hedge between 60 and 80 of interest 
arising on floating rate interest bearing loans and borrowings 
at 31 december 2008 651 of the group’s floating rate interest
bearing loans and borrowings were hedged 2007 691 an 
analysis of the derivative instruments used by the group to hedge 
its interest rate and other exposures is contained in note 31 to the 
financial statements
with the exception of petrofac international limited which 
undertakes the majority of the group’s lumpsum epc contracts 
and which under its existing banking covenants is restricted from 
making cash payments to petrofac limited in excess of 70 of its 
net profit in any one year none of the company’s subsidiaries are 
subject to any material restrictions on their ability to transfer funds 
in the form of cash dividends loans or advances to the company
capital expenditure
capital expenditure on property plant and equipment during the 
year was us2555 million 2007 us1172 million the principal 
elements of capital expenditure were
 additions to oil  gas assets in relation to energy developments’ 
 ■
interest in the don assets of us1673 million
 completion of the group’s new office building in sharjah of 
 ■
us405 million
 completion of the chergui gas plant in tunisia of us219 million
 ■
capital expenditure on intangible oil  gas assets during the year 
was us370 million 2007 us497 million which was principally 
in respect of capitalised expenditure on near field appraisal wells in 
relation to energy developments’ interest in block pm304 offshore 
malaysia of us247 million and costs of us98 million in relation 
to the unsuccessful prospero well which were subsequently 
writtenoff 
shareholders’ funds
total equity at 31 december 2008 was us5590 million 2007 
restated us5230 million the main elements of the net 
movement were the increase in retained earnings for the year of 
us2003 million less the net gain on the maturity of cash flow 
hedges recognised in the income statement of us321 million a 
loss on foreign currency translation of us842 million and the net 
change in fair value of derivatives of us259 million plus an 
increase in the sharebased payments reserve of us160 million 
and a net increase in the cost of treasury shares held by the 
company in relation to employee share scheme awards of  
us395 million
return on capital employed
the group increased its return on capital employed for the year 
ended 31 december 2008 to 527 2007 restated 457
dividends
the company proposes a final dividend of 1790 cents per share 
for the year ended 31 december 2008 2007 1150 cents which 
if approved will be paid to shareholders on 22 may 2009 provided 
they were on the register on 24 april 2009 shareholders who have 
not elected before 9 march 2009 to receive dividends in us 
dollars will receive a sterling equivalent of 1257 pence per share 
given the strong cash generation of the group the board has taken 
the decision to revise the company’s dividend policy increasing the 
percentage of earnings to be distributed by way of dividend to 
approximately 35 of full year post tax profits previously 30 
which will continue to be paid approximately onethird as an interim 
dividend and twothirds as a final dividend
forwardlooking statements
the business review pages 12 to 47 contains forwardlooking 
statements with respect to the financial condition results and 
operations of the group by their nature forwardlooking 
statements involve a number of risks uncertainties or 
assumptions that could cause actual results or events to differ 
materially from those expressed or implied by the forward
looking statements these risks uncertainties or assumptions 
could adversely affect the outcome and financial effects of the 
plans and events described herein forwardlooking statements 
contained in the business review regarding past trends or 
activities should not be taken as representation that such trends 
or activities will continue in the future petrofac limited 
undertakes no obligation to update the forwardlooking 
statements contained in this review or any other forwardlooking 
statements made
financial review continued
46
petrofac annual report 
and accounts 2008 business review
ebitda to cash conversion

06 1657
07 1233
08 1350
return on capital employed

06 457
07 457
08 527
cash generated from operations
us millions
06 3286
07 3716
08 5657
as restated
1
  staff in the aberdeen office 
2
   staff in the kuala lumpur office
3
   northern producer don field
3
1
2
gearing ratio
us millions unless otherwise stated 2008 2007 
   restated
interestbearing loans and borrowings a 1426 1101
cash and shortterm deposits b 6944 5816
net cashdebt c  b – a 5518 4715
equity attributable to petrofac limited  
 shareholders d 5588 5228
gross gearing ratio ad 255 211
net gearing ratio cd net cash net cash 
  position  position
47
petrofac annual report 
and accounts 2008 financial review adding value to 
our people and 
our communities
corporate social 
responsibility
48
petrofac annual report 
and accounts 2008 corporate social responsibility
major events
in september there was an incident involving a helicopter 
departing the maersk resilient jackup drilling rig which was under 
contract to our customer dubai petroleum establishment in the 
rashid field approximately 70km offshore dubai the helicopter 
which was carrying two crew members and five passengers on a 
routine flight crashed during takeoff tragically there were no 
survivors and our deepest sympathies are with the families friends 
and colleagues of those involved the incident affected many 
people and sincere thanks are due to those maersk dubai 
petroleum and petrofac staff and all others who responded to the 
incident so effectively an accident investigation is currently being 
conducted under the direction of the government authorities 
of dubai
during the year 17 major potential hazard events 2007 24 were 
recorded and although very few of these resulted in personal injury 
we continue to examine such incidents very carefully in order to 
identify – and thereby address – the underlying causes a new 
group level review board was formed during 2008 under the 
chairmanship of the group chief operating officer this board 
which meets quarterly assesses incident and accident 
investigations taking particular note of recommended improvement 
actions and provides challenge and support to the organisation to 
ensure effective lessons are learned the new driver and passenger 
code of conduct referred to in the next section was issued as a 
direct result of the work of this board customer representatives 
have also provided input when accidents occur on a location not 
under the direct management of petrofac this mutual learning has 
also proved to be beneficial
vehicle incidents
in 2008 we introduced a code for drivers and passengers travelling 
in company vehicles this helped to reduce significantly the 
number of serious or major potential incidents involving vehicles on 
project sites or travelling between locations to give a driving 
incident frequency rate of 022 2007 098 major or serious vehicle 
incidents per million kilometres driven driving related accidents are 
a major risk area for the business and the very significant reduction 
in vehicle incident frequency rates is both an encouraging and 
notable achievement 
staff welfare
the health and welfare of staff is essential to the smooth operation 
of the business measures are in place to assess the health and 
fitness of senior management in all divisions the group health 
programme continues to provide comprehensive medical 
assessments for those at risk particularly employees involved in 
offshore and overseas assignments health suites manned by 
medical professionals are available at the majority of our project 
and operational sites as well as within two of our main operating 
centres in sharjah and aberdeen
safeguarding our people
our people work in remote and potentially dangerous environments 
where security can be a real challenge we are committed to 
creating a safe working environment for everyone
we were happy with the response of our crisis and 
communications processes in the wake of the terrorist attacks in 
mumbai in september 2008 petrofac had over 500 people in the 
city including visitors at the time of the attacks and all were quickly 
accounted for
the company plays an integral role in the lives of its people in the 
communities in which we operate and in the broader world we 
have a clear responsibility to play our part positively and recognise 
the importance of winning and retaining stakeholder support
our approach to corporate social responsibility csr is central to 
the successful delivery of business performance
 we aim to be acknowledged as a leader in the management of 
 ■
health safety security environment and integrity assurance 
hsseia and an expert in delivering high performance from diverse 
workforces in geographically challenging operational conditions
 we conduct business in a manner which is consistent with 
 ■
longestablished values being safe ethical innovative cost
conscious responsive to customers and relentlessly focused on 
delivering results
 we provide a quality service to customers and make a positive 
 ■
contribution to the communities where we operate
during 2008 we revised our csrrelated policies and these are 
again being updated for 2009 the most recent policies on the 
following areas can be viewed in full at wwwpetrofaccom
– responsibility
– health and safety
– security
– integrity assurance
– environment
health safety and security
being safe is a core petrofac value we have wellestablished safety 
management systems in each division and during 2008 these were 
complemented by a complete review of group processes and 
procedures with the overall objective of cascading improvement 
throughout the company we now have a groupwide review 
board for major hazard incidents which met quarterly during 2008 
recordable incidents
the reduction and ultimately the elimination of accidents and 
injuries is a key albeit demanding target for the company in 2008 
we launched our horizon zero initiative across the whole group 
supported by a dedicated online resource area a horizon zero 
toolkit was issued to all supervisors containing tools to help raise 
awareness of occupational safety the toolkit can be personalised 
to meet local needs the year also saw the launch of the petrofac 
guide to safety leadership which provides supervisors with 
thoughtful and structured advice for the daytoday issues they 
may face
in 2008 the group’s employees and subcontractors completed 67 
million manhours 2007 60 million of activity during the year the 
group experienced a recordable incident frequency rate of 032 per 
200000 manhours 2007 035 for the sixth year in a row this 
frequency rate has reduced during 2008 a lost time injury 
frequency rate of 003 2007 007 was experienced this 
compares well with industry published data but further action is 
again being taken to continue to improve during the current year
in europe we have maintained an accident and incident database 
for a number of years which helps us to track events and the 
actions that arise from them this is now being rolledout across all 
of our operations and project locations 
49
petrofac annual report 
and accounts 2008
health safety security environment 
and integrity assurance a comprehensive monthly security briefing is provided to all 
divisional management teams and this is also factored into the 
general risk review process as new projects and their locations are 
evaluated further development of systems and procedures to 
safeguard the security of the company’s staff and subcontractors 
will continue during 2009
environment
protecting the environment remains a priority for the group  
we are committed to conducting operations in a way that 
minimises our impact with a target of zero environmental incidents 
during 2008 we decided to streamline the decisionmaking 
process and improve accountability across the business by 
disbanding the environmental committee and devolving 
responsibility to the group head of hsseia who reports to the 
board and has a team of environmentalists positioned throughout 
the group as a result a carbon management steering group has 
been formed and is led by the group head of hsseia this forum 
is primarily charged with developing our carbon strategy and shall 
report progress to the board during 2009
a number of environmental initiatives were launched during 
the year
planet petrofac
launched in november 2008 ‘planet petrofac – our gold standard 
for the environment’ is an internal campaign aimed at increasing 
awareness of environmental issues improving environmental 
behaviours and minimising the damage that we as a business and 
as individuals have on the environment the campaign has been 
supported by extensive communications which focus on the fact 
that ‘small steps can make a big difference’
as part of planet petrofac we held our first groupwide 
environment month in november 2008 in previous years 
successful environmental initiatives have been held in sharjah and 
aberdeen but this was the first time that activities across the group 
have been held simultaneously events were organised under four 
themes reduce recycle educate and replace a huge range  
of activities took place and included the planting of more than 
1000 trees within the locations of sharjah woking aberdeen  
and chennai
carbon footprint
we have introduced a focus on our carbon footprint baselines are 
now established and in 2008 as a group we emitted 184844 
tonnes of carbon dioxide tco2 2007 119576 tco2 these 
figures have been independently verified our baselines cover 
emissions relating to vehicle and construction activity and energy 
usage at our various project and office locations this information 
also includes our equity ownership activities on a net basis but 
does not include locations where we manage facilities on behalf of 
our customers these statistics are included within our customers’ 
own reports 
as we committed in last year’s report we have formal environmental 
management systems for each relevant part of our business and 
these operate within the framework of bs en iso 140012004 
approval as part of these approvals our environmental 
performance is continually assessed by the verifier lloyds register 
quality assurance 
external certification
during the year the emergency response service centre in 
aberdeen successfully passed its iso 9001 audit this is the only 
such centre in the uk and it provides an integrated response 
capability to a range of customers the audit demonstrates that the 
centre has met the evergrowing customer demand for the highest 
level of excellence
in 2008 first point assessment limited fpal independently 
assessed the group’s facilities management business 
environmental performance and gave a ranking of nine out of ten 
one of the highest ever given to a contractor these scores show 
continual improvement since the last certificate was issued in 2006
integrity assurance
it is our responsibility to safeguard everyone associated with 
hydrocarbon operations which are designed constructed operated 
managed or supported by the company standards have been set 
which aim to ensure that no unforeseen process operational or 
major hazard events occur as a result of our activities 
the more mature assets which we manage continue to present 
significant challenges and we are addressing these through a 
comprehensive approach to asset integrity 
review board
in 2008 we established an asset integrity review board which met 
monthly throughout the year and will continue to do so in 2009  
we utilise a traffic light reporting tool to analyse each asset based 
on a number of process safety factors relating to design technical 
and operational integrity during the year we completed detailed 
inspections of the kittiwake platform north sea and dubai 
petroleum assets uae which are under petrofac management and 
will complete inspections of all other assets in 2009 the findings 
are tracked on a monthly basis and reported to the review board 
with the results also being reported to the board of the company
industry involvement
we are major players in our industry and seek to contribute our 
experience and expertise in many areas including asset integrity
during 2008 our group head of hsseia was cochair of step 
change in safety an industry body associated with the oil  gas 
industry in the uk this organisation is responsible for working 
across the industry with dutyholders and the broader community 
in the north sea it sets standards for occupational safety and 
asset integrity 
in november we held a safety conference in sharjah this was 
attended by 75 employees including the group chief executive 
and many senior managers
corporate social responsibility 
continued
50
petrofac annual report 
and accounts 2008 corporate social responsibility
2008 review
the year once again saw an increase in headcount from 9800 at 
the end of 2007 to 11100 at the end of 2008 through principally 
organic growth
we believe that our workforce and recruitment practices should 
reflect the diverse communities in which we operate and this is 
demonstrated through our graduate recruitment programme to 
support our ongoing growth we continue to place importance on 
recruiting and developing talented graduates and recruited around 
100 in 2008 from europe the middle east and asia
a key highlight of the year – and an expression of our commitment 
to our people – was the appointment of our first group head of 
human resources 
approximately 27 of employees
1
 across the world now participate 
in at least one of our share incentive schemes further details  
can be found in the remuneration report on pages 66 to 74  
of this report
we also encourage our people to engage with the company 
on other less mainstream levels for example we launched the 
picture petrofac competition in 2008 open to all employees this 
photography competition resulted in the creation of a 2009 
calendar the theme was left open while being mindful of petrofac’s 
core values – being safe ethical innovative costconscious 
people
strategy
as part of our vision for 2012 petrofac aims to become a bestin
class employer in the diverse markets in which we operate in order 
to achieve this we need to combine a clear organisational structure 
with good processes and policies as well as a strong framework 
of behaviours
the link between organisational clarity where staff clearly 
understand the company’s structure and their role in it with good 
performance allowing people to develop and do their best within 
and for the organisation is widely recognised our philosophy is to 
ensure that our structure processes and behaviours all work 
together to make petrofac an employer of choice within our chosen 
sectors and a company that people are proud to work for
while we hope that over the course of the next few years these 
elements will become more recognisable across the group we also 
strongly believe it is and will remain appropriate for there to be 
differences between locations and business units we need to 
understand where overall consistency in what we do is appropriate 
and where it is not
the hr challenge lies in getting that balance right over the next few 
years this involves looking in detail and further improving how we 
recruit retain performancemanage and develop our people 
together with assessing the overall work environment and the 
processes policies and systems we have in place we need to take 
a longterm view and one which we hope will enable us to achieve 
the strategic vision to which we aspire
1 excluding agency and contractor staff and the group’s share of joint venture 
employees
1
  tree planting in sharjah 
2
   staff in the kuala lumpur office
1 2
51
petrofac annual report 
and accounts 2008 people the challenge of providing consistent and quality training has been 
improved by the introduction of a comprehensive elearning 
programme initially piloted in our engineering  construction 
division we now plan to extend this across the organisation during 
2009 the objective of elearning is to support other development 
activities and also to provide learning opportunities to employees in 
remote locations more than 1000 of our people are already using 
elearning
continuous development of our people at all levels remains integral 
to our approach we strive to ensure that all petrofac people have 
the highest levels of competence the majority of our workforce is 
now assessed against technical and behavioural competencies 
and this initiative is scheduled for completion during 2009
our focus on developing people extends beyond our own 
organisational boundaries in the uk employees from our woking 
office are helping to train the engineers of the future by delivering 
interactive workshops in local schools the science and 
engineering ambassadors programme run by the surrey science 
and technology regional organisation is aimed at supporting 
teachers to inspire young people about science technology 
engineering and maths this year nine of our graduates took part  
in two halfday workshops at broadmere community primary 
school in sheerwater to help year 6 pupils learn about logit  
data logging technology 
communications
effective communication is the bedrock of a successful hr 
strategy during 2008 we maintained the momentum behind 
recent communications initiatives while also making significant 
progress with new ones
petrofacts our companywide magazine continued to be 
published quarterly with the addition of a special internal issue in 
november which introduced the important organisational changes 
outlined elsewhere in this report
as we committed in last year’s report we completed a new global 
intranet during 2008 which will be launched in the first half of 2009 
petronet will be the home for a wide range of useful information to 
help employees navigate their way around our growing organisation 
they will be able to find the latest news and information from 
across the group as well as useful tools such as office addresses 
brand guidelines and company brochures petronet also features 
an opportunity for employees to have their say on a range of topics 
for 2009 we will continue to keep all employees uptodate  
with business activities and performance plus group policies  
and initiatives
responsive to customers and focused relentlessly on delivering 
results the winner monzer chammas who is based in the sharjah 
office said “the competition is a great initiative it has improved my 
sense of belonging and attachment to the petrofac brand and 
reinforces for me that we all have what it takes to do and achieve 
anything if we set our minds to the task” plans are already 
underway to run the competition again in 2009
code of business conduct
we reviewed the code of business conduct during 2008 
ethical behaviour in business is a subject which has engaged 
governments and regulators increasingly in recent years it is no 
different within petrofac where the board considers this to be one 
of its main responsibilities 
we have more than 11000 personnel working in some of the most 
challenging environments across the world in these circumstances 
it is essential that we establish a set of common principles and 
minimum standards of business conduct to guide us the code of 
business conduct sets out the behaviours that we expect our 
employees suppliers contractors agents and partners to comply 
with in undertaking business for and with petrofac the code also 
establishes the general principles that inform the way in which we 
work with each other and with external parties finally it provides 
practical advice designed to help to protect our employees in their 
daytoday work and to maintain the reputation of petrofac
the revised code will be launched in the first half of 2009 
supported by a poster campaign and an elearning initiative  
each of which will focus on ensuring that all staff understand  
the importance of the code
developing our people
employee retention is as important as attracting high quality 
individuals to join petrofac in the first place we have a professional 
development programme to address the needs of postgraduates 
and young professionals focusing on improving mobility across the 
group sharing learning and best practice and providing fasttrack 
career plans for high potential individuals
a major objective for the petrofac academy which was launched  
in 2006 to develop petrofac managers and leaders of the future  
is to increase awareness and understanding of the technical 
standards and behaviours that make up the petrofac way more 
than 70 workshops were held during the year to achieve this
corporate social responsibility 
continued
52
petrofac annual report 
and accounts 2008 corporate social responsibility
petrofac’s membership of ukbased business in the community 
bitc continues this organisation has over 850 member 
companies we derive great value from membership and are 
increasingly able to avail ourselves of the programmes bitc offers 
as our activities increase specifically during the year we have 
been able successfully to utilise the services of its global partner 
network to seek advice and source reputable international ngos
our community relations programme continues to be centred on 
initiatives that support training and education here is a summary 
of some of the more significant projects from the year
community
at petrofac we are mindful of our responsibilities to the communities 
where we operate we work hard to ensure that relationships with 
customers suppliers communities nongovernmental organisations 
ngos and governments are founded on mutual respect
during 2008 we continued to make progress with our community
based activities particularly in the international arena where 
activities have been less wellestablished compared with some of 
our longerrunning ukbased programmes it has been pleasing 
to see the increased integration of community relations into our 
business processes and the evaluation of these activities being 
directly related to business objectives and values 
1
  atmonatti vidya mandir school khopoli india 
2
   nakta secondary school tunisia
3
   learning centre in kitgum sudan
3
1
2
53
petrofac annual report 
and accounts 2008 community helping to build 60 schools in sudan
our education project in sudan with international ngo brac is 
bringing muchneeded educational opportunities to the country’s 
children formally launched on 1 may 2008 the project aims to 
build 60 schools for approximately 1800 children aged 814 
the project is being operated in close collaboration with the 
ministry of education and follows the government curriculum for 
southern sudan it aims to provide access to cost effective good 
quality primary education for the poorest and most disadvantaged 
children in central equatoria juba and eastern equatoria torit 
the project is expected to increase significantly the numbers of 
children that enrol into schools particularly girls and reduce 
dropout rates it also creates employment for women within the 
local communities as all the teaching and support staff are female 
in juba 30 schools were opened before the end of 2008 with 
some 900 students enrolled in the schools more than 55 of them 
are girls who are particularly disadvantaged in torit 20 schools 
will open early in 2009 
children from all backgrounds have enrolled into these schools 
including orphans children from very poor families children that 
had previously dropped out and children that were not already 
in school 
tunisia during 2008 we completed the classroom extension at 
the 600pupil secondary school in the town of nakta providing 
a valuable facility for the students to undertake their studies and 
homework petrofac along with construction partner pireco also 
donated two ambulances to the local hospital in sfax during our 
environment month in november exceptionally high levels of 
engagement and commitment were demonstrated by the 
hasdrubal team to the campaign something that was greatly 
appreciated by the local community during the month the  
team also involved the nakta school in a comprehensive 
environmental awareness programme which included activities 
such as litter collection 
egypt two schools in the matrouh area in the western desert 
have been built and furnished by petrofac in conjunction with our 
customer apache for local bedouin children following the 
success of this programme approvals are now in place to build 
a further two schools this time in the salam area of the western 
desert for completion in mid2009 the oneroom schools 
equipped with running water and electricity feature a large 
classroom as well as living accommodation for two resident school 
teachers the schools each provide primary education for around 
45 children between the ages of four and 13 
algeria towards the end of 2008 after conducting a needs 
analysis with the local authorities we began implementing a 
programme to provide whiteboards to all the schools in the in salah 
region a total of 38 schools and 341 classrooms this programme 
is scheduled for completion in early 2009 
india education for the underprivileged is also a primary focus for 
our indian operations in collaboration with the arvind gandbhir 
secondary school in jogeshwari in northern mumbai our 
scholarship programme has continued to grow in strength during 
2008 we sponsored 68 students and the reputation of the 
programme within the local jogeshwari community is creating 
additional interest and support for the school during the later part 
of 2008 the mumbai office also established a second scholarship 
programme with a school in khopoli in the indian state of 
maharashtra approximately 100km from mumbai currently 55 
students are receiving financial support and in common with the 
arvind gandbhir programme they have to maintain a high standard 
of academic excellence to retain their scholarship 
petrofac is also funding a programme to build classrooms and 
a community hall for a school near khopoli this is a residential 
school for tribal children who live in remote areas their parents 
have no fixed income and live well below the poverty line the 
students currently live sleep and study in the same room there are 
no separate classrooms as well as education health wellbeing 
and hygiene are an integral part of the khopoli programme 
kyrgyz republic we have contributed to the financial support of 
eight talented students who would not otherwise be able to pursue 
a university education five of the students will undertake full 
academic courses and three will undertake intensive english 
language courses the candidates many of whom are from 
disadvantaged backgrounds were selected by kyrgyz petroleum 
company senior management in conjunction with the american 
university of central asia because of their academic ability  
and achievements the students have also been given the 
opportunity to work in the bishkek and jalalabat offices during  
their vacation periods
malaysia our malaysia programme is part of the global 
programme of chevening scholarships awarded by the british 
government we have agreed to make a financial contribution 
which has been matched by the british government to support 
a malaysian student currently studying for an msc in renewable 
systems technology at loughborough university
uk in 2007 we launched a payroll giving scheme to enable uk 
based petrofac employees to make charitable donations through 
their monthly payroll with the additional commitment that 50 of 
their donations would be matched by the company keen to 
support a charity which reflected the group’s policy for 2008 the 
participants chose to support learning for life uk ltd this 
organisation is part of the global campaign for education for all and 
works with local partners to provide education and opportunities 
for children in south asia who are disadvantaged by poverty 
geography conflict or social and economic circumstances 
2008 was the 10th anniversary of the educationindustry 
partnership between petrofac and kincorth academy in aberdeen 
scotland the partnership has benefited both pupils and teachers 
at the school and enabled our people to provide significant support 
to their local community this partnership model has been 
replicated throughout scotland and was instrumental in shaping the 
scottish government’s ‘determined to succeed’ initiative this year 
the partnership won ‘the schools award’ at the children  young 
people services awards the partnership was also honoured this 
year by aberdeen city council at a civic reception to celebrate the 
‘determined to succeed’ school and business partnership
in a further example of our commitment to education our woking 
office is helping to train the engineers of the future see people 
section on pages 51 and 52
community involvement
in addition to our support for education we also play our part in the 
broader community 2008 saw a number of charitable and sporting 
initiatives which demonstrated the close bonds between our people 
and the communities in which they live and work full details of 
which are provided on our website 
corporate social responsibility 
continued
54
petrofac annual report 
and accounts 2008 corporate social responsibility
1
  nakta secondary school tunisia 
2
   anudanit adivasi prathamik ashramshala 
school chive village khopoli india
3
   matrouh school eygpt
4
    atmonatti vidya mandir school khopoli india
2
1
4
3
55
petrofac annual report 
and accounts 2008 community board of directors
6
2
7
3
8
1
4
5
9
56
petrofac annual report 
and accounts 2008 governance
1 rodney chase 
nonexecutive chairman 
c
rodney chase was appointed nonexecutive chairman of petrofac 
in june 2005 rodney spent 38 years at bp plc of which 11 were 
served on its board he was deputy group ceo on his retirement 
from the bp group in may 2003 he also spent time as ceo of the 
exploration and production and marketing and refining divisions 
he continues to serve as nonexecutive deputy chairman of tesco 
plc nonexecutive director of computer sciences corporation 
nonexecutive director of nalco company and nonexecutive 
director of tesoro corporation he has previously held positions 
as a board member of boc plc and diageo plc age 65
2 ayman asfari
group chief executive 
c
ayman asfari joined petrofac in 1991 to establish petrofac 
international ayman has more than 28 years’ experience in the oil 
 gas industry and served as chief executive officer of petrofac 
international until his appointment as group chief executive of 
petrofac limited in january 2002 ayman previously worked as the 
managing director of a major civil and mechanical construction 
business based in oman ayman currently serves as a member  
of the board of trustees of the american university of beirut  
age 50
3 michael press
senior independent director nonexecutive director 
a b c d
michael press was appointed to the petrofac board in april 2002 
having previously held senior executive positions for the standard 
oil company inc and bp and as a main board director of amerada 
hess between 1997 and 2001 michael held various posts at kbc 
advanced technologies including nonexecutive director executive 
chairman and chief executive michael is chairman of twma an 
aberdeen based global drilling waste management firm and 
continues to serve as senior independent director of chart 
industries inc age 61
4 maroun semaan 
group chief operating officer
maroun semaan joined petrofac in 1991 to establish petrofac 
international from 1977 to 1991 maroun held various project 
positions with consolidated contractors international co based  
in the middle east where he was involved in the management of  
oil  gas pipeline process facilities and civil works projects in 
oman and bahrain having previously been chief executive of 
petrofac engineering  construction he was appointed group 
chief operating officer in january 2009 following the group 
reorganisation maroun currently serves as a member of the board 
of trustees of the american university of sharjah age 53
5 bernard de combret 
nonexecutive director 
b c d
 
bernard de combret was appointed to the petrofac board in 
november 2003 bernard was deputy chairman of total’s executive 
committee until his retirement in 2002 following senior positions in 
both the french ministry of foreign affairs and ministry of finance 
he spent 24 years with elf and subsequently total where he was 
ceo of refining marketing ceo for gas power new energies and 
ceo for trading and shipping he is currently nonexecutive 
chairman of coastal energy in addition to serving as a non
executive director of winstar resources ltd and a member of the 
international advisory board of grupo santander he has previously 
held positions as a board member of renault vi cepsa and 
banco central hispano age 66
6 keith roberts 
chief financial officer 
keith roberts joined petrofac in march 2002 as chief financial 
officer having spent most of his working life as an investment 
banker based in the city of london after positions in commercial 
banking with standard chartered bank and then with county 
bank the merchant banking subsidiary of national westminster 
bank keith moved into corporate finance with hawkpoint partners 
where he was a managing director and a member of the operating 
committee he has previously served as a nonexecutive director  
of the peacock group plc age 52
7 kjell almskog 
nonexecutive director 
a c d
kjell almskog was appointed to the petrofac board in march 2005 
kjell has held a number of senior executive positions including 13 
years at the international abb group  most latterly as deputy group 
ceo and head of its oil gas  petrochemicals division he was 
then chief executive of kvaerner from 1998 until its merger with 
aker in 2001 kjell was appointed nonexecutive chairman of intex 
resources asa a norwegian listed mining and exploration 
company in november 2007 he continues to serve as non
executive deputy chairman of kverneland group asa and as a 
senior advisor of the taylor group age 68
8 amjad bseisu 
chief executive energy developments 
amjad bseisu joined petrofac in 1998 and founded the energy 
developments’ business in 2007 amjad rejoined the petrofac 
board having previously served for several years prior to the 
company’s admission to listing on the london stock exchange in 
2005 from 1984 to 1998 amjad worked for the atlantic richfield 
company arco ultimately as head of international marketing 
negotiations and business development and president of arco 
petroleum ventures and arco crude trading inc amjad was a 
founding nonexecutive director of serica energy plc and stratic 
energy corporation age 45
9 rijnhard van tets
nonexecutive director 
a b d
 
rijnhard van tets was appointed a non–executive director of 
petrofac in 2007 rijnhard is currently general partner of laaken 
asset management nv he was an adviser to the managing board 
of abn amro between 2002 and 2007 having previously served as 
a member of abn amro’s managing board for 12 years rijnhard 
occupied a number of very senior executive positions at abn 
amro most latterly as chairman of abn amro’s wholesale 
clients and investment banking group between 1996 and 2002 
rijnhard currently serves as a nonexecutive chairman of the 
boards of arcadis nv euronext amsterdam nv euronext nv and 
equity trust holdings sarl and is a nonexecutive director of iff 
europe nyse euronext inc stichting administratiekantoor 
bührmann nv and a number of charitable organisations age 61
a member of the audit committee
b member of the remuneration committee
c member of the nominations committee
d member of the risk committee 
57
petrofac annual report 
and accounts 2008 board of directors senior management team
2
8
4
7
1
3
9
5 6
58
petrofac annual report 
and accounts 2008 governance
10 9
1 robin pinchbeck 
group director of strategy 
and corporate development
2 richard milne 
group director of legal and 
commercial affairs
3 marwan chedid 
managing director 
engineering  construction 
ventures
4 bill dunnett 
managing director offshore 
engineering  operations
5 gordon east 
managing director 
production solutions
6 leigh howarth 
managing director  
petrofac training
7 rob jewkes 
managing director  evp 
project development  
operations energy 
developments
8 subramanian sarma
managing director 
engineering  construction
9 rajesh verma
managing director  
engineering services
 these titles reflect the new organisational structure which was 
implemented on 1 january 2009
59
petrofac annual report 
and accounts 2008 management team 60
petrofac annual report 
and accounts 2008
photograph kittiwake platform north sea the company is incorporated in jersey where there is no formal 
code relating to corporate governance however the board 
recognises that it has a responsibility to ensure good governance 
of the company in order to help it fulfil its obligations to all its 
stakeholders not just shareholders it is therefore strongly 
committed to the highest standards of corporate governance and 
has decided to adhere wherever possible to the provisions of  
the combined code on corporate governance published in 2006 
the combined code in the same way as if the company was 
incorporated in the united kingdom the company has prepared 
an additional report on its corporate social responsibility pages 
48 to 55 which sets out its engagement with society in general 
this report however together with the nominations committee 
report audit committee report and remuneration committee 
report is the company’s formal report on its corporate governance 
framework and has been prepared by reference to the combined 
code the directors consider that throughout 2008 and up to the 
date hereof the company has fully complied with the provisions of 
the combined code
the combined code has identified four subject areas which 
underpin good corporate governance and these are
 directors
■ ■
 directors’ remuneration
■ ■
 accountability and audit
■ ■
 relations with shareholders
■ ■
directors
the board
the board is responsible to shareholders for the control and 
leadership of the group and for safeguarding the company’s 
reputation the board currently has nine members and details of 
the individuals’ skills and experience are contained in the directors’ 
biographies on page 57
the board has a formal schedule of matters reserved to itself for 
decision including but not limited to matters of a strategic nature 
approval of the annual budget approval of major acquisitions 
investments and disposals major changes to the group’s capital 
structure the preparation of financial statements the 
recommendation or declaration of dividends the entry into 
contracts which are deemed to be material strategically or by 
reason of size succession planning and appointments to the 
board senior executive remuneration ensuring the maintenance 
of a sound system of internal controls reviewing its own and its 
committees’ performance and reviewing the group’s overall 
corporate governance arrangements 
the board met regularly during the year the board met in person 
at six meetings which had been scheduled well in advance  
in 2008 the board held three such meetings in continental europe 
one meeting in sharjah the united arab emirates where the group 
has its largest office one meeting in jersey where the company is 
incorporated and one meeting in tunisia where the group has 
significant business operations in addition the board held a 
number of telephone conference board meetings at relatively  
short notice which arose as a result of specific business usually  
in relation to a particular commercial project between scheduled 
board meetings the agenda for each scheduled board meeting 
allows the chairman and nonexecutive directors to meet  
without the executive directors present in addition the board 
attended a strategy and business planning day with members  
of senior management 
attendance by the directors at the scheduled meetings of the 
board was as follows
number of meetings 6
rodney chase
nonexecutive chairman 6
michael press
senior independent director 6
bernard de combret
nonexecutive director 6
kjell almskog
nonexecutive director 6
rijnhard van tets¹
nonexecutive director 5
ayman asfari
group chief executive 6
maroun semaan
group chief operating officer 
formerly chief executive engineering  construction 6
keith roberts
chief financial officer 6
amjad bseisu
chief executive energy developments 6
1  rijnhard van tets missed one meeting due to a long standing prior 
commitment arranged before his appointment to the board in 2007
chairman and group chief executive
the roles of chairman and group chief executive are clearly 
separated and set out in writing the chairman is responsible for 
the leadership of the board ensuring its effectiveness and setting 
its agenda and for ensuring that there is effective communication 
with all shareholders the chairman also facilitates the effective 
contribution of all directors and ensures that there is a constructive 
relationship between the executive and nonexecutive directors 
the role of the group chief executive is to implement strategy by 
developing manageable goals and priorities provide leadership 
and motivation to the management teams running the group’s 
businesses and develop proposals for the board to consider in all 
areas reserved for its judgement 
board balance and independence
the board believes that it is of sufficient size to contain an 
appropriate balance of skills and experience but not so large as to 
be unwieldy the board considers all four nonexecutive directors 
which expression excludes the chairman to be independent in 
character and judgement and is not aware of any relationships or 
circumstances which are likely to affect or could appear to affect 
the judgement of any of them the extensive knowledge and 
experience of the nonexecutive directors combined with the focus 
and experience of the chairman and executive directors enable the 
board to lead and give direction to the group without any 
imbalance that may allow any individual or group of individuals to 
dominate its decision making any director having a concern in this 
or any other regard may raise it with the chairman or the senior 
independent director directors have access to the advice and 
services of the secretary to the board who is responsible for 
ensuring that board procedures and applicable rules and 
regulations are observed and for advising the board through the 
chairman on governance matters the directors are entitled to 
take independent professional advice at the company’s expense 
if required
corporate governance report
61
petrofac annual report 
and accounts 2008
governance
corporate governance report  performance evaluation
having used an external facilitator to help evaluate the board its 
committees and directors in 2006 the board decided that it would 
undertake internal reviews in 2007 and 2008 during the year the 
chairman and secretary to the board periodically followed up on 
action points identified during the 2007 evaluation process most 
action points were discharged during the year but a small number 
remained either partially or wholly unresolved at the year end  
in the last quarter of 2008 each director completed an extensive 
questionnaire prepared by reference to the combined code and 
the secretary to the board collated the results the chairman 
subsequently led a formal discussion of all directors as a 
consequence of which a list of actions including those that 
remained undischarged from 2007 were agreed for the 
forthcoming year the chairman will review the board evaluation 
process in 2009 michael press the senior independent director 
led a separate evaluation of the chairman through a series of 
questionnaire led interviews with other members of the board and 
senior management before providing feedback to the chairman  
in a onetoone appraisal board evaluation will continue on an 
annual basis
reelection of directors
all directors are required by the company’s articles of association 
to submit themselves to shareholders for reelection after their 
initial appointment by the board and thereafter by rotation at least 
once every three years sufficient biographical information and 
other information including in the case of a nonexecutive director 
seeking reelection a statement as to his continued effectiveness 
and commitment is provided to enable shareholders to make an 
informed decision 
directors’ remuneration 
while the board is ultimately responsible for directors’ 
remuneration the remuneration committee consisting solely 
of independent nonexecutive directors is responsible for 
determining the remuneration and conditions of employment of 
executive directors and certain members of senior management 
a report on the directors’ remuneration including a more detailed 
description of the role and activities of the remuneration 
committee is set out on pages 66 to 74
accountability and audit
internal control
the board is responsible for reviewing the effectiveness of the 
group’s system of internal control including financial operational 
and compliance controls and systems for the identification and 
management of risk the audit committee routinely meets with 
both the internal and external auditors and discusses matters of 
internal control in addition the audit committee on behalf of  
the board conducted a specific review of the internal control 
environment following the year end the risk committee a 
committee of the board complements the audit committee by 
focussing in more detail on the group’s operational controls and 
risk management framework the group’s system of internal control 
can only provide reasonable and not absolute assurance against 
material misstatement or loss as it is designed to manage rather 
than eliminate the risk of failure to achieve business objectives 
however the focus on risks and controls by these two committees 
of the board ensures a strong oversight process for the full board
the group has an ongoing process for identifying evaluating and 
managing significant risks faced by the group which has been in 
place for the year under review and up to the date of this annual 
report and is in accordance with the revised turnbull guidance 
the board is assisted by various committees principally the 
nominations audit and remuneration committees reports for 
2008 from each of these committees are provided from pages 
64 to 74 the board keeps the membership of the committees  
under review 
appointments to the board
the nominations committee ensures a formal rigorous and 
transparent procedure for the appointment of new directors in the 
case of candidates for nonexecutive directorships care is taken 
to ascertain whether they will have sufficient time to fulfil their 
board and if applicable committee responsibilities as part of this 
process candidates disclose all other time commitments and on 
appointment undertake to inform the chairman of any proposed 
changes the terms and conditions of appointment of nonexecutive 
directors are available from the secretary to the board on request 
information and professional development
to enable the board to discharge its duties all directors are given 
appropriate documentation in advance of board meetings the 
agenda and supporting board papers are generally distributed by 
the secretary to the board at least a week in advance of each 
scheduled board meeting and 24 hours in advance of an 
unscheduled meeting in addition all directors are encouraged to 
make further enquiries as they feel appropriate of the executive 
directors or management team
the company has a formal programme of training for its directors 
which is designed both to increase familiarity with the group’s 
business operations as well as to develop technical skills and 
knowledge the company is committed to providing continuing 
education to directors in relation to its business and as such 
ensures that members of senior management give regular 
presentations to the board on significant areas of business 
operations in 2008 presentations were made at three of the 
scheduled board meetings on the following aspects of the  
group’s activities its brownfield business its activities in the 
commonwealth of independent states and its tunisian business 
which included a visit to a gas processinglpg and condensate 
plant in hasdrubal where the engineering  construction division 
was nearing completion of a significant engineering procurement 
construction and commissioning contract for bg tunisia limited 
for 2009 the chairman and group chief executive will agree 
further business presentations and at least one site visit having 
due regard not only to previous presentations but also the  
group’s evolving strategy as well as assisting directors in their 
understanding of the group’s business the company is committed 
to ensuring that its directors’ technical knowledge particularly in 
relation to the governance requirements for a uk listed company 
remains up to date the secretary to the board provides regular 
technical updates to the board and its formal committees once a 
year the chairman formally requests each director to consider 
whether or not he requires any specific training on any aspect of 
the company’s activities further any director may request the 
secretary to the board to arrange any individual training or 
professional development if he feels that this would be helpful  
to him in discharging his responsibilities in 2008 the secretary  
to the board arranged for the company’s legal advisers to provide 
directors with a refresher session on the legislative and regulatory 
framework for share dealing by directors and senior employees  
in the event that the board appoints a new director the chairman 
works with the individual and the secretary to the board to develop 
a tailored induction programme to take account of the individual’s 
specific needs 
corporate governance report continued
62
petrofac annual report 
and accounts 2008 if they do occur and the actions being taken in order to manage 
and mitigate those risks the head of enterprise risk management 
has access to the risk matrices for the businesses and furthermore 
receives regular reports from the management team for each 
business he provides regular and detailed formal updates to the 
full board both on the most material of these individual business 
risks as well as any risks separately identified by the group’s most 
senior management which are judged to have the potential to 
affect the whole enterprise historically there has been no 
dedicated management forum in which such enterprise risks have 
been identified and considered but management has decided to 
introduce such a forum in 2009 
the board has a risk committee whose members are the following 
independent nonexecutive directors kjell almskog chairman 
bernard de combret michael press and rijnhard van tets the 
committee met three times during the year and is supported by the 
head of enterprise risk management it has formal terms of 
reference which are reviewed annually by the committee and are 
available on the company’s website the secretary to the board 
acts as secretary to the committee minutes for all meetings are 
circulated to all directors and supplemented by an oral report from 
the committee’s chairman at the next board meeting the 
committee takes primary responsibility for
 reviewing proposed group risk policy and procedures and 
■ ■
recommending that they be adopted by the board 
 overseeing group operational risk management systems including 
■ ■
insurance management 
 reviewing any external disclosures made by the group in relation 
■ ■
to its risk management
as well as considering existing risks a rigorous process exists for 
the consideration of risks associated with undertaking new 
business via individual business and group risk review committees 
further during the year management strengthened the process  
by which it reviews ongoing risks associated with ongoing  
major projects
details of the principal risks and uncertainties facing the business 
are disclosed on pages 28 and 29 
assurances
the board receives assurances from the following internal and 
external controls
 historical financial performance and revised forecasts for the full 
■ ■
year with significant variances are regularly reported by 
management to the board
 reports from the audit committee and the risk committee
■ ■
 the close involvement of the executive directors in all aspects of 
■ ■
the group’s daytoday operations including regular meetings 
each month with the head of each business unit
 customer audits
■ ■
 reports and presentations to the board by senior management 
■ ■
including the group director of legal and commercial affairs the 
group director of hsseia the head of enterprise risk 
management and the group head of tax
 copies of minutes from group risk review committee meetings 
■ ■
relations with shareholders
the group chief executive chief financial officer and head of 
investor relations have regular meetings with major shareholders 
and research analysts the chairman reminds major shareholders 
annually in writing of his availability along with the senior 
independent director should there be issues which the 
shareholders wish to discuss 
the key elements which make up a robust system of internal 
control in a business may be characterised by the business’ control 
environment and its risk management and assurance process a 
description of each of these elements for the group is given below 
control environment
the board ensures that the group has a clear organisational 
structure for the control and monitoring of its businesses including 
defined lines of responsibility and delegation of authority each of 
the group’s businesses operates and maintains its own business 
management system designed to ensure the application of sound 
processes of control to all projects and business activities such 
systems encompass policies and procedures relating to all major 
areas of risk including matters relating to contract execution health 
and safety security and the environment the company has a 
group head of health safety security the environment and 
integrity assurance hsseia who heads a team with responsibility 
for overseeing the development of appropriate hsseia management 
systems and ensuring compliance with them across the group 
the role of group head of hsseia was created in 2007 
management having taken the decision to expand the remit of the 
group head of health safety and security to include responsibility 
for the group’s environment and integrity assurance management 
systems prior to this the board had taken the decision to form an 
environmental committee partly in response to the lack of any 
dedicated group resource with overall responsibility for managing 
environmental matters although the committee’s primary role was 
that of oversight in relation to the group’s environmental policy 
environmental management systems environmental targets and 
key performance indicators it often took the initiative in seeking to 
implement group environmental management systems and targets 
the committee was able to do this effectively as the majority of its 
members were executive directors albeit rodney chase acted as 
chairman however following the appointment of the group head 
of hsseia the board agreed that the individual concerned would 
as part of his role take on responsibility for a group approach to 
management of environmental matters and provide formal updates 
to the full board twice a year the full board henceforth restricting 
itself to responsibility for the oversight of environmental matters  
as a result the environmental committee was viewed as redundant 
and it was therefore disbanded during the year the board considers 
that the environmental committee provided a vital initial impetus 
for the consideration of group environmental matters but that the 
new environmental reporting structure taken in conjunction with the 
additional resourcing provided is a more appropriate framework for 
the development of the group’s environmental management 
for details about environmental progress refer to page 50 of the 
corporate social responsibility report the company has a code 
of business conduct code which amongst other matters 
includes policies for the company and its employees on health and 
safety security the environment and areas of legal compliance 
towards the end of 2008 the board approved a revised code 
which management had extensively redrafted not only to ensure 
compliance with current best practice and new legislation but also 
to make it easier for employees to understand management will 
focus on increasing employee awareness and understanding of the 
revised code following its publication in 2009 the group has a 
procedure in place to ensure that employees may raise ethical 
concerns in confidence
risk management
each of the group’s individual businesses operates and maintains a 
business management system incorporating policies and 
procedures in relation to risk management in addition each 
business is required to produce a risk matrix which identifies key 
business risks the probability of those risks occurring their impact 
governance
63
petrofac annual report 
and accounts 2008 corporate governance report    at the next board meeting the committee’s principal roles and 
responsibilities include the following
 consider and make recommendations to the board on all new 
■ ■
appointments of directors taking into account the overall size 
balance and composition of the board
 consider succession planning
■ ■
 make recommendations to the board concerning the 
■ ■
reappointment of any director following conclusion of his 
specified term in office
meetings are held as deemed necessary by the chairman and 
during the course of 2008 two meetings were held and all 
members attended the committee considered its terms of 
reference the board’s size and composition management’s 
succession planning training and the proposed reelection of kjell 
almskog amjad bseisu and maroun semaan at the 2009 annual 
general meeting the committee recommended to the board that 
all three directors offering themselves for reelection should be 
proposed for reelection by the company’s shareholders having 
taken into account their individual performances which were 
considered as part of the annual board evaluation exercise 
this report was approved by the board on 6 march 2009
rodney chase
chairman
audit committee report 
membership of the audit committee during the year and to the 
date of this report is as follows
 rijnhard van tets
■ ■
 kjell almskog
■ ■
 michael press
■ ■
both rijnhard van tets and kjell almskog have recent and relevant 
financial experience and are deemed to have competence in 
accounting 
the committee’s powers are conferred to it under the company’s 
articles of association it has formal terms of reference which have 
been drafted in accordance with the combined code are reviewed 
annually by the committee and are available on the company’s 
website the committee’s principal roles and responsibilities include
 monitoring the integrity of the company’s financial statements 
■ ■
and announcements relating to its financial performance and 
reviewing significant financial reporting judgements
 keeping under review the effectiveness of the company’s internal 
■ ■
control and risk management systems
 monitoring the effectiveness of the internal audit function and 
■ ■
reviewing its material findings 
 overseeing the relationship with the external auditors including 
■ ■
agreeing their remuneration and terms of engagement monitoring 
their independence objectivity and effectiveness and ensuring 
that policy surrounding their engagement to provide nonaudit 
services is appropriately applied 
the committee is authorised to investigate any matters within its 
terms of reference and may therefore seek any information it 
requires from any employee and obtain at the company’s expense 
such professional advice as it sees fit in order to fulfil its duties 
however the committee has no executive function and its primary 
role is to review and challenge rather than assume responsibility 
for any matters within its remit 
the board receives regular feedback from analysts and major 
shareholders compiled by the company’s brokers and financial pr 
consultants in particular following presentations and meetings after 
the publication of financial results 
the principal method of communicating with the majority of 
shareholders is via the annual report and financial statements  
and the company’s website which contains details of financial 
presentations to analysts and other information about the group 
all shareholders have the opportunity to attend the annual general 
meeting all directors were present at the 2008 annual general 
meeting and all intend to be present at the 2009 annual general 
meeting to answer shareholders’ questions details of the meeting 
are set out in the notice of meeting which is sent to shareholders 
and which contains the text of resolutions to be proposed and 
explanatory notes where necessary shareholders attending will  
be advised of the number of proxy votes lodged for each resolution 
in the categories “for” and “against” together with the number of 
“votes withheld” all resolutions will be voted on by taking a poll the 
results of which will be announced to the london stock exchange 
and published on the company’s website  
as a company incorporated in jersey shareholders are required 
under the uk listing authority to notify the company in the event 
that they can exercise 5 or more of the company’s voting rights  
if the company were incorporated in the uk shareholders would 
be required to notify the company in the event that they could 
exercise 3 or more of the company’s voting rights as a matter of 
principle the company has tried wherever possible to govern itself 
as if it were incorporated in the uk rather than jersey and for this 
reason adopted articles of association which currently require its 
shareholders to notify the company in the event that a shareholder 
acquires voting rights in 3 or more in the company’s share 
capital the company currently has 345434858 shares in issue 
and each share has one vote one shareholder has notified the 
company as at 13 february 2009 that it has an interest in 3 or 
more of the company and is as follows
  number of percentage
  ordinary of allotted
  shares share capital
legal  general group plc 13900929 402
in addition to the above ayman asfari and maroun semaan 
together with their respective close families held major 
shareholdings details of which are disclosed in the remuneration 
report on page 74
this report was approved by the board on 6 march 2009 
nominations committee report
membership of the nominations committee during the year and  
to the date of this report is as follows
 rodney chase chairman
■ ■
 ayman asfari
■ ■
 kjell almskog
■ ■
 michael press
■ ■
 bernard de combret
■ ■
the committee’s powers are conferred on it under the company’s 
articles of association it has formal terms of reference which have 
been drafted in accordance with the combined code are reviewed 
annually by the committee and are available on the company’s 
website the secretary to the board acts as secretary to the 
committee minutes for all meetings are circulated to all directors 
unless there is deemed to be a conflict of interest and 
supplemented by an oral report from the committee’s chairman  
corporate governance report continued
64
petrofac annual report 
and accounts 2008 internal audit
the committee evaluated the performance of internal audit from 
the quality of reports from the group head of internal audit 
feedback from management and an assessment of work planned 
and undertaken during the year the group head of internal audit 
recruited two additional members of staff so that the department is 
currently staffed by six individuals including the group head of 
internal audit the members of the department include accountants 
it specialists and an oil  gas engineer the committee will 
continue to keep the resourcing of the department under review 
but currently believes it is adequate both in terms of head count 
experience and capability 
external audit
the committee recommended to the board that the external 
auditors be reappointed following an assessment of the quality  
of service provided including the qualifications of the external 
auditors the expertise and resources made available to the group 
the auditors’ independence and the effectiveness of the audit 
process the decision was based on consideration of reports 
issued by external auditors and feedback from the chief financial 
officer and group financial controller
the committee satisfied itself that the external auditors remain 
independent having regard to the auditors’ procedures for 
maintaining and monitoring independence the auditors’ policy for 
rotation of the lead partner and key audit personnel and a policy 
which specifies areas of nonaudit services that can be carried out 
by the external auditors and the financial thresholds above which 
nonaudit services require the approval of the chairman of the 
committee the nonaudit services policy was reviewed by the 
committee during the year and amended in line with best 
corporate governance practice any individual fees in relation to 
nonaudit services in excess of us200000 andor any excess of 
the aggregate fees for nonaudit services above 50 of the annual 
audit fee require approval from the chairman of the committee 
within these parameters where it is considered reasonable that  
the external auditors undertake nonaudit services for sound 
commercial and practical reasons without inhibiting objectivity  
then engagement is permitted such services might include 
independent certification reporting for financial services authority 
or uk listing authority ukla purposes and tax advice the cost 
of services provided by the external auditors during the year is 
detailed in note 4g to the financial statements most of the cost of 
nonaudit services was associated with tax and assurance services 
where involvement by the external auditors was considered 
appropriate and in the best commercial interests of the group
attendance at the meetings during the year was as follows
number of meetings 6
rijnhard van tets
chairman 6
kjell almskog¹ 5
michael press 6
1 kjell almskog was unable to attend one meeting due to a prior commitment
this report was approved by the board on 6 march 2009
rijnhard van tets
committee chairman 
attendance at the committee meetings is at the invitation of the 
chairman of the committee however the chief financial officer 
group financial controller group head of internal audit and the 
external auditors generally attend some or all of the committee 
meetings the group head of internal audit and the external 
auditors have the right to speak directly to the chairman of the 
committee at any time and have the opportunity to meet the 
committee without management present at least once a year 
the secretary to the board acts as secretary to the committee 
minutes for all meetings of the committee are circulated to all 
directors and supplemented by an oral report from the committee’s 
chairman at the next board meeting identifying any matters in 
respect of which action or improvement is required and making 
recommendations where appropriate 
the committee met six times during the year and considered the 
following matters
financial reporting
the committee reviewed the 2007 annual report and financial 
statements and the 2008 interim report issued in september 2008 
before recommending their publication to the board as part of this 
overall review the committee considered the draft preliminary 
announcements in respect of the company’s 2007 final and 2008 
interim results the committee discussed with the chief financial 
officer and external auditors the significant accounting policies 
estimates and judgements in preparing the company’s 2007 
annual report and financial statements and 2008 interim report  
in addition the committee reviewed drafts of trading statements 
and interim management statements before recommending their 
publication to the board  
internal controls and risk management systems
the committee has responsibility for reviewing the company’s 
internal controls and it primarily discharges this responsibility 
through its engagement with the group’s internal and external 
auditors an annual internal audit plan drawn up on a riskbased 
approach is presented to the committee for its review and 
approval at the start of the financial year the group head of 
internal audit provides the committee with an interim progress 
report part way through the year as a result of which the audit plan 
may be revised before returning to the committee with his final 
report for the year at the start of the subsequent year at the same 
time as the final report for the previous year is presented an audit 
plan for the current year is proposed and so the ongoing process 
of internal control review is continued in 2008 the internal audit 
department completed a total of 39 assignments across a broad 
crosssection of activities
in addition the committee also received presentations or reports 
during the year in relation to the group’s whistle blowing policy 
known as the “speaking up” policy by employees and its 
effectiveness and the group’s use of an aircraft owned by  
an offshore trust in which the group chief executive has a 
beneficial interest
governance
65
petrofac annual report 
and accounts 2008 corporate governance report    introduction
this report has been prepared by the remuneration committee 
in accordance with schedule 7a to the companies act 1985 and 
approved by the board the directors are not required under 
jersey law to prepare a remuneration committee report but in 
accordance with the principles of good corporate governance as 
outlined in the combined code have chosen to do so 
this report sets out the remuneration policy and principles under 
which the directors and senior managers are remunerated and 
details the remuneration and share interests of each director for the 
year ended 31 december 2008 
shareholders will be invited to approve this report at the annual 
general meeting the vote on the resolution will have advisory 
status only will be in respect of remuneration policy and overall 
remuneration packages and will not be specific to individual levels 
of remuneration the members of the remuneration committee will 
be available at the annual general meeting to answer shareholders’ 
questions about the directors’ remuneration 
the sections of this report dealing with directors’ emoluments and 
share interests have been audited pages 73 and 74 by the group’s 
external auditors
information not subject to audit
composition of the committee
membership of the remuneration committee during the year and 
to the date of this report is as follows
 bernard de combret 
■ ■
 michael press 
■ ■
 rijnhard van tets 
■ ■
given their diverse backgrounds and experience the board 
believes that the current committee members provide a suitably 
balanced perspective on executive remuneration matters none of 
the directors who served during the year had or has any personal 
interest in the matters to be decided other than as shareholders 
of the company any potential conflict of interest arising out of 
crossdirectorships or any daytoday involvement in the 
management of the group’s business activities 
role of the remuneration committee
the remuneration committee is a formal committee of the board 
and has powers delegated to it under the articles of association its 
remit is set out in terms of reference formally adopted by the board 
which were last reviewed in december 2008 a copy of the terms 
of reference is available on the company’s website the primary 
purposes of the remuneration committee are set out in its terms 
of reference and are to 
 recommend to the board the broad policy in respect of senior 
■ ■
management remuneration
 ensure that the levels of remuneration are appropriate in order 
■ ■
to encourage enhanced performance
 approve the design and set the targets for any performance 
■ ■
related pay scheme 
 review the design of all share incentive plans before approval by 
■ ■
the board and shareholders to monitor the application of the 
rules of such schemes and the overall aggregate amount of  
such awards
 set the remuneration of all executive directors members of senior 
■ ■
management and the chairman including annual cash bonus and 
share incentive payments
during 2008 the group chief executive ayman asfari attended 
meetings at the invitation of the chairman in order to provide advice 
on setting remuneration for other executive directors and members 
of senior management he attended no part of a meeting at which 
his own remuneration was being discussed during the year the 
company appointed a group head of human resources geoffrey 
tranfield mr tranfield and the group director of legal and 
commercial affairs richard milne attended meetings to provide 
advice in relation to the company’s share incentive schemes the 
secretary to the board acts as secretary to the committee and 
therefore attended all meetings 
the committee appointed norton rose and deloitte llp to provide 
independent advice on remuneration matters during the year 
norton rose acts as general legal advisors to the group in 2008 
deloitte llp did not provide any other assistance to the company 
minutes of the meetings of the committee are circulated to all 
directors unless any director is the subject of debate by the 
committee in which case the minutes will not be sent to him the 
chairman supplements the formal circulation of the minutes by an 
oral update from the committee chairman at the board meeting 
following a committee meeting 
directors’ remuneration report
66
petrofac annual report 
and accounts 2008 year under the restricted share plan see pages 69 to 71 for 
details of these share incentive schemes
good governance
the board and the committee consider that throughout 2008 and 
up to the date of this report the company has complied with the 
provisions of the combined code relating to directors’ remuneration
remuneration policy and practice
nonexecutive directors
the board with the assistance of independent professional advice 
determines the fees of the independent nonexecutive directors 
the board agreed during the year that it would now review 
nonexecutive director fees annually when deciding an 
appropriate fee level for each independent nonexecutive director 
the board takes into account the level of fees generally paid to 
nonexecutive directors serving on boards of similarly sized 
companies listed in the united kingdom and further considers the 
responsibility and time commitment required of each individual 
executive directors and members of senior management
the committee aims to establish a level of remuneration which 
is sufficient to attract retain and motivate directors and key 
executives of the calibre required to achieve the group’s objectives 
and which furthermore reflects the size and complexity of the 
group’s business together with an executive’s individual 
contribution and geographical location 
activities of the remuneration committee
the committee met three times in the year and reports herewith its 
material findings attendance at the meetings during the year was 
as follows
number of meetings 3
bernard de combret 
chairman 3
michael press 3
rijnhard van tets 3
in addition to its routine business the committee also undertook 
the following activities during the year and in the period to the date 
of this report in discharging its responsibilities
 review of the group’s policy in respect of senior management 
■ ■
remuneration
 consideration of management’s strategic approach to the 
■ ■
retention and motivation of personnel identified as key to the 
delivery of the group’s overall strategy including consideration 
of the continued appropriateness of the group’s current share 
incentive schemes 
the conclusions from these reviews are outlined below 
in addition written resolutions were passed by the committee 
which approved awards under the company’s performance share 
plan and deferred bonus share plan as part of the company’s 
annual cycle of share awards and various awards throughout the 
executive directors’ remuneration packages currently include the following elements
element purpose performance period methodology in determining award
basic salary and cash allowances  to attract and retain not applicable role and contribution – market median or below
noncash benefits to attract and retain not applicable market standard for role and geographic location
annual cash bonus
■■■ ■
maximum grant level of 100 of basic  to incentivise delivery of one year award subject to achievement of financial 
salary or 150 for outstanding  performance goals for  targets and personal objectives 
performance any financial year
share incentive scheme
performance share plan psp
■■■
maximum grant level of 100 of basic  incentivises longterm value three years 50 of awards are subject to total shareholder 
salary or 150 in exceptional  creation and encourages  return tsr ranking relative to an international 
circumstances executive share ownership  peer group
    50 of awards are subject to an achievement  
of compound annual growth in earnings per  
share eps
governance
67
petrofac annual report 
and accounts 2008 directors’ remuneration report historically the committee has been guided by the general 
principles that
 the overall maximum remuneration of executive directors should 
■ ■
be split broadly equally between the following three components 
basic salary annual cash bonus and awards under the psp and
 the annual cash bonus and psp awards do not exceed 100 or 
■ ■
in exceptional circumstances 150 of basic salary
these principles have been applied in 2008 
in 2007 the committee agreed that its remuneration policy for 
executive directors and members of senior management going 
forward will be that basic salaries will be median or below against 
a relevant benchmarking group but that the variable element of 
remuneration will be structured so that individuals can achieve total 
remuneration that is upper quartile subject to achievement of 
challenging performance standards 
in formulating its remuneration policy the committee believes 
that the most appropriate benchmarking group for the executive 
directors and members of senior management are
 a select group of international and uk oil  gas services 
■ ■
companies for the group chief executive and operational 
executives to the extent that data in relation to such comparator 
companies is publicly available and
 the ftse 350 for functional executives
■ ■
the committee believes that such a remuneration policy which sets 
the fixed elements at median or below and provides incentives 
capable of delivering upper quartile pay for delivery of superior 
performance is the most effective way in which to ensure that the 
executive directors and members of senior management are 
incentivised to deliver the group’s strategic goals and thus deliver 
longterm shareholder value 
the committee intended to review in 2008 whether or not the 
broadly equal split between the three components making up 
senior management remuneration remained appropriate if potential 
upper quartile remuneration were to be delivered however the end 
of 2008 witnessed the near systemic failure of international banking 
systems turmoil in the world’s financial markets and uncertainty 
about the global economic outlook due to the prevailing economic 
conditions the committee postponed further development of the 
company’s remuneration policy and for the time being retains its 
existing broadly equal split between basic salary cash bonus and 
psp awards the committee intends to keep this matter under 
review in 2009 having regard both to the global economic 
environment and the outlook for the oil  gas services industry 
basic salary cash allowances and noncash benefits
basic salary
ordinarily the committee determines an executive director’s basic 
salary at the beginning of each year and any change is applied with 
effect from 1 january 
petrofac has had strong growth in profit since its initial public 
offering ipo at the time of the ipo the committee set salary 
levels appreciably below prevailing market rate since the company 
has grown significantly in 2008 the rate of increase for basic salary 
increases for executive directors were between 212 and 238 
these salary increases with effect from 1 january 2008 were 
required to bring basic salaries closer to market median levels  
in reaching its decision the committee was guided by the 
benchmarking exercise it had conducted with the assistance of 
deloitte llp in 2007
the committee has awarded executive director basic salary 
increases for 2009 in line with nearly all petrofac employees of 
36 the one exception is maroun semaan who has received a 
125 increase to reflect his promotion to group chief operating 
officer with effect from 1 january 2009
the committee will monitor the economic climate as well as 
company and individual performances in deciding executive 
director salary increases in future years
cash allowances 
in addition to basic salary uk resident executive directors receive 
a cash allowance in place of benefits including but not limited to 
car allowances and pension contributions 
in 2008 ayman asfari received a cash allowance of £40000 whilst 
the other uk based executive directors received £30000 the 
cash allowances were increased at the start of the year because no 
increases had been awarded to executive directors for the previous 
three years and were made with due regard to the benchmarking 
exercise carried out in 2007 cash allowances for 2008 remain 
below median 
none of the directors is eligible to receive pension contributions 
from the company 
in addition to basic salary and noncash benefits maroun semaan 
as a uae resident executive director is required by local statute to 
receive a cash sum called an end of service indemnity from his 
employer on the termination of his employment within the uae 
accordingly the company accrues an amount each year 
directors’ remuneration report continued
68
petrofac annual report 
and accounts 2008 actual cash bonuses for the year are disclosed in the table set 
out on page 73 and taken in conjunction with awards to directors 
under the company’s psp reflect the remuneration committee’s 
assessment of each director’s achievement of his objectives in 
2008 and his contribution to the group’s performance in the year 
details of awards to directors under the company’s psp are 
outlined on page 73 of this report 
share incentive schemes
performance share plan psp
under the psp executive directors and a restricted number of 
other members of senior management may receive performance 
related share awards on an annual basis participants are granted 
contingent awards to receive ordinary shares in the company 
which will in normal circumstances vest after three years subject to 
the continued employment of the participant and to the extent that 
performance conditions have been satisfied three years was 
selected as the performance period under the psp as it is 
considered to be an appropriate longterm time horizon for both 
performance measurement and retention 
the initial market value of the shares over which any such award is 
made to any participant in any financial year may currently not 
exceed 100 of basic annual salary or in circumstances which the 
committee deems to be exceptional 150 of basic annual salary
in 2008 and 2009 exceptional award levels have been granted to 
two individuals maroun semaan and ayman asfari received grants 
in excess of 100 of salary in 2008 and 2009 to reflect their 
outstanding individual contribution to the growth of the company 
in the last two years
 maroun semaan – 124 of salary in 2008 and 122 of salary 
■ ■
in 2009
 ayman asfari – 123 of salary in 2008 and 131 of salary in 2009
■ ■
the committee believes that psp performance conditions should 
strike a balance between achieving alignment with ultimate 
shareholder returns and reward for delivery of strong underlying 
performance the latter being more directly under the control of 
senior management
vesting of psp grants to date have been made subject to two 
performance measures calculated over the three years following 
the grant of the award
i  total shareholder return tsr relative to an index of a 
comparator group of uk and international companies for 50 
of the award and
ii  earnings per share eps growth relative to predefined targets 
for 50 of the award
the company also pays a cash allowance in respect of housing 
and transport for maroun semaan in line with local market practice 
in 2008 maroun semaan received a cash allowance of 
us150000 for the year 
noncash benefits
all executive directors receive certain benefitsinkind uk resident 
executive directors currently receive private health insurance life 
assurance and longterm disability insurance maroun semaan 
who is resident in the uae receives similar benefits as well as other 
benefits typical for expatriate senior executives such as education 
and return flights to his permanent home 
annual cash bonus payments
in january of each year the committee considers whether or not 
to award each executive director an annual cash bonus for the 
previous year in its deliberations the committee considers two 
principal elements in determining a director’s cash bonus
 first the extent to which the group and as appropriate the 
■ ■
business division for which the individual director is primarily 
responsible have achieved annually established budgets and 
targets
 second the extent to which the individual has met personal 
■ ■
objectives which are agreed at the start of each year in question 
and which are established with the aim of achieving the group’s 
business strategy each executive director’s personal objectives 
include health and safety targets in addition some executive 
directors have additional targets in relation to succession 
planning risk management and the development and 
implementation of the group’s social environmental and ethical 
programme in this way the remuneration committee considers 
that it has in place an incentive structure for members of senior 
management which promotes responsible behaviour 
for 2008 in line with the stated policy the committee set the 
maximum bonus potential at 100 of basic annual salary for 
achievement of corporate and personal targets but retained the 
ability to increase this to 150 of basic annual salary if outstanding 
performance were to be achieved 
cash bonus awards in respect of 2008 to executive directors 
ranged from 96 to 102 of salary due to strong company and 
individual performances the exception to this was maroun 
semaan who received a bonus of 1375 of salary this level 
of award was considered appropriate in order to recognise his 
outstanding contribution to the financial performance of the group 
and the engineering  construction division during the course of 
the year and in addition the achievement of all his personal objectives 
governance
69
petrofac annual report 
and accounts 2008 directors’ remuneration report eps is the earnings which excludes dividends in pence 
attributable to one ordinary share the company’s eps 
performance over a three year period is calculated and vesting  
is in line with the following scale 
eps compound annual growth  percentage of eps 
over three year period element of award vesting
15 or less 0
more than 15 but less than 20  straight line vesting between 
0 and 30 
20 30
more than 20 but less than 25  straightline vesting between 
30 and 100 
25 or more 100
as part of its remit the committee regularly reviews not only the 
overall suitability of the group’s share incentive schemes but also 
any performance conditions attached to such schemes the 
committee will therefore undertake a general review of the group’s 
schemes in 2009 but particularly the psp in light of the committee’s 
goal to adopt a detailed policy for executive directors and senior 
management which will permit the delivery of upper quartile pay 
subject to the satisfaction of stretching performance conditions 
the committee reviewed psp performance conditions early in 
2009 and concluded that they remain appropriate for grants 
scheduled as part of the annual cycle of awards to be made in 
march 2009 albeit the tsr index will be reduced to those 16 
companies of the index which remain independent 
other senior management management and allemployee 
schemes
as part of its oversight role the committee has considered the 
following three schemes
deferred bonus share plan dbsp
under the dbsp selected employees are invited or in some cases 
required to defer a proportion of their annual cash bonus into 
company shares under the plan the shares which are acquired 
with a participant’s cash bonus are called “invested shares” 
following such an investment the company will generally grant the 
participant an additional award over a number of shares being a 
specified ratio to the number of his or her invested shares and 
these awards are called “matching shares” to date matching 
shares have been awarded to participants on the basis of a 11 
ratio the sole exceptions to this being two awards made in 2006 to 
an executive director and senior executive respectively in these 
particular cases it was felt to be inappropriate to grant any 
matching shares 
the tsr index was composed of 17 companies for grants made in 
2006 and 18 companies for 2007 and 2008 see table below this 
index will consist of 16 companies for the 2009 psp award due to 
the delisting of two companies during 2008 
the committee believes that relative tsr remains the best 
measure of the company’s ultimate delivery of shareholder returns 
and that eps is the internal financial measure that is most closely 
linked to value creation in an oil  gas services business
tsr is the percentage return to a purchaser of an ordinary share 
in the company arising from share price appreciation and 
reinvestment of dividends over a given period the company’s 
tsr performance over a three year period calculated in a common 
currency is ranked against the tsr of the comparator group as at 
the date of each grant and vesting is in line with the following scale
tsr relative to unweighted percentage of tsr
index of comparator group  element of award vesting
less than index 0
equal to index 30
more than index by up to 25 straightline vesting between 
  30 and 100
more than index by 25 or more 100 
1  vesting is subject to achievement of eps growth over the period of at least 
retail price index plus 3 over the three year vesting period
2  in 2006 the companies from which the comparator index is composed were 
as follows abbot group plc aker kvaerner asa amec plc helix energy 
solutions group inc formerly cal dive international inc chicago bridge  iron 
co nv entrepose contracting expro international group plc halliburton co 
jgc corp saipem spa schlumberger limited snclavalin group inc 
technip sa wood group john plc fluor corporation foster wheeler 
limited and worleyparsons limited for grants made in 2007 and 2008  
the comparator index included the above listed companies and in addition 
tecnicas reunidas sa for the 2009 grant the 2008 comparator group will  
be used excluding abbot group plc and expro international group plc
3  the committee is authorised under the rules of the psp to make retrospective 
adjustments to the comparator index for any year of award in the event that 
one or more of the constituent companies are subject to any of the following 
delisting merger acquisition or other such event in 2008 abbot group plc 
and expro international group plc ceased to exist as independent companies 
the committee therefore decided that these two entities would be removed 
from the comparator index with effect from the respective months in which 
they ceased to be independent companies 
4  it is assumed that £100 is notionally invested at the start of the performance 
period equally amongst all the companies making up the tsr index at the 
end of the vesting period the index will represent the value of what the initial 
notional investment of £100 would have returned over the period this will be 
representative of the average return made by the company’s competitors this 
is then compared to the return by an equivalent notional investment of £100 in 
petrofac over the same period 
directors’ remuneration report continued
70
petrofac annual report 
and accounts 2008 subject to a participant’s continued employment at the time of 
vesting invested and matching share awards may either vest 100 
on the third anniversary of grant or alternatively vest one third on 
the first anniversary of grant one third on the second anniversary  
of grant and the final third on the third anniversary of grant the 
remuneration committee uses its discretion to determine whether 
or not a participant should be subject to either three year cliff or 
annual vesting or a mixture thereof but in doing so takes 
management’s recommendations into consideration
in 2007 the remuneration committee decided that neither 
executive directors nor the most senior members of management 
should participate in the scheme as there are no performance 
conditions attached to such awards if executive directors or 
members of the group’s most senior management are considered 
for dbsp participation in future years the company undertakes  
not to make matching awards unless such awards are subject to 
suitably stretching performance conditions and a deferral period of 
at least three years 
restricted share plan rsp
under the rsp selected employees are made grants of shares on 
an ad hoc basis throughout the year the committee intends that 
the scheme is used primarily but not exclusively to make awards 
to individuals who join the group part way through the year having 
left accrued benefits with a previous employer the committee 
periodically monitors the level of awards executive directors are 
not eligible to participate in the scheme 
the petrofac approved share incentive plan sip
under the sip all uk employees including uk resident directors 
may invest up to £1500 per tax year of gross salary or if less 10 
of salary to purchase ordinary shares there is no holding period 
for these shares
dividends and voting rights in respect of shares awarded under the 
group’s share incentive schemes
participants in the psp dbsp and rsp have no dividend or voting 
rights in respect of their respective awards until such time as their 
awards vest however when the company pays a dividend the 
number of shares comprised in an award will be increased by the 
number of shares which could have been acquired with the amount 
of dividend received had the participant been the owner of the 
award shares the vesting of the extra shares will be subject to the 
same performance conditions as the original award shares
participants in the sip receive dividends in respect of their shares 
like any other shareholder the trustee invites participants prior to 
a general meeting to indicate how he or she wishes the trustee to 
vote in respect of his or her shares on any resolutions to be put to 
shareholders in general meeting
funding policy in relation to psp dbsp and rsp
in 2007 the board approved a funding policy in relation to the 
company’s employee benefit trust which holds shares to be used 
to satisfy awards under the company’s dbsp psp and rsp the 
company reviews its contingent obligations under the above share 
incentive schemes on a quarterly basis with a view to ensuring that 
the employee benefit trust should purchase and hold shares under 
a loan arrangement with the group sufficient to cover between 
80 to 100 of its maximum liability at any time under the three 
schemes
performance graph
the company’s total shareholder return is defined as the 
company’s share price growth plus any dividends used to acquire 
further shares in petrofac for shareholders’ information the 
company’s tsr performance since the company was admitted to 
listing on the london stock exchange in october 2005 is shown on 
the graph below compared with the performance achieved by the 
ftse 250 index which the committee believes is the most relevant 
recognised benchmark to allow a meaningful assessment of the 
company’s performance
350
300
250
200
150
100
50
0
dec
07
oct
06
aug
06
jun
06
apr
06
feb
06
dec
05
oct
07
aug
07
jun
07
apr
07
feb
07
dec
08
oct
08
aug
08
jun
08
apr
08
feb
08
dec
06
oct
05
tsr rebased to 100 on listing date
ftse 250 excluding investment trusts source datastream
petrofac
governance
71
petrofac annual report 
and accounts 2008 directors’ remuneration report executive directors’ service contracts
each of the executive directors has a twelve month rolling service contract with the company and is contractually restricted to a 
termination payment equal to 12 months’ salary and benefits further each executive director is subject to reelection by shareholders at 
least every three years none of the executive directors is currently subject to a contractual retirement date details of the directors’ service 
contracts are disclosed in the table below
 number of months’ notice 
 
name of executive director date of service contract and date first appointed last reelected next due for reelection company director
ayman asfari 13 september 2005 11 january 2002 2008 agm 2011 agm 12 12
maroun semaan 13 september 2005 11 january 2002 2006 agm 2009 agm 12 12
amjad bseisu 13 september 2005 11 may 2007 2007 agm 2009 agm 12 12
keith roberts 13 september 2005 6 april 2002 2008 agm 2011 agm 12 12
executive directors are entitled to accept up to one nonexecutive directorship outside and unconnected to the group provided prior 
permission is sought from the board any fees earned from such an appointment are retained by the director no executive director 
currently holds any such external directorships
nonexecutive directors
details of current individual nonexecutive directors’ contracts for services are given in the table below these directors are not part of any 
pension bonus or share incentive scheme of the company or group directors are subject to reelection at least every three years and are 
typically expected to serve two threeyear terms none of the nonexecutive directors has a service contract and none is entitled to 
compensation on leaving the board save that if requested to resign the chairman and each nonexecutive director is entitled to receive 
prior notice or fees in lieu of notice as in the table below
  date of latest letter of appointment general meeting at  required notice from
name of director and date first appointed which last reelected next due for reelection company in months
rodney chase 13 september 2005 21 june 2005 2008 agm 2011 agm 3
kjell almskog 13 september 2005 23 march 2005 2007 agm 2009 agm 3
bernard de combret 13 september 2005 19 november 2003 2007 agm 2010 agm 3
michael press 13 september 2005 30 april 2002 2007 agm 2010 agm 3
rijnhard van tets 2 february 2007 11 may 2007 2007 agm 2010 agm 3
in 2008 with the exception of the chairman nonexecutive directors were paid a basic annual fee of £45000 for their role on the board 
and a further annual fee of £7000 per chairmanship of a committee if applicable the board as a whole is responsible for deciding 
nonexecutive directors’ fees unless such fees exceed £500000 in aggregate in which case shareholder approval in general meeting 
would be sought
the remuneration of the chairman of the board is set by the remuneration committee the chairman’s fee is all inclusive and is currently 
£100000 per year having been reduced during the year from £105000 following the disbandment of the environmental committee 
directors’ remuneration report continued
72
petrofac annual report 
and accounts 2008 audited information
amount of each director’s emoluments in the relevant financial year
the remuneration of each director in respect of 2008 with 2007 comparison comprised
   salaries  cash   2008 2007
   and fees  allowances benefits cash bonus total total
   us’000 us’000¹ us’000² us’000 us’000 us’000
executive directors
ayman asfari³   813 74 75 832 1794 1740
maroun semaan   400 183 56 550 1189 1016
amjad bseisu³
4
   481 55 1 462 999 496
keith roberts³   499 55 1 497 1052 953
nonexecutive directors
rodney chase
5
   188 – – – 188 209
kjell almskog   95 – – – 95 91
bernard de combret   95 – – – 95 96
michael press   82 – – – 82 88
rijnhard van tets   95 – – – 95 61
    2748 367 133 2341 5589 4750
1  payment in lieu of pension allowance and other benefits for uk resident directors and end of service indemnity and various allowances for the uae resident director 
none of the directors is eligible to receive pension contributions from the company
2 benefits vary depending upon the director 
3  uk based directors are paid in sterling amounts have been translated to us dollars based on the prevailing rate at the date of payment or award with the exception 
of the bonus amounts which have been translated using the average exchange rate for the year 
4 amjad bseisu was appointed on 11 may 2007 with the result that remuneration disclosed for him in 2007 is in respect of just over seven months 
5  rodney chase’s fee for 2008 was lower than 2007 his fee was reduced part way through 2008 following the disbandment of the environmental committee of which 
he had acted as chairman
awards of shares under the psp 
awards of shares during the year to executive directors under the psp are disclosed in the table below
   number of shares dividend number of
   shares at granted in year shares shares at
director and  of basic salary  31 december under annual granted in 31 december date from which market price
date of grant in year of grant 2007 award cycle the year¹ 2008² shares vest on date of grant
ayman asfari
24 april 2006 714 71475 – 1419 72894³ 24 april 2009 353p
19 march 2007 1000 91420 – 1815 93235
4
 19 march 2010 415p
19 march 2008 1227 – 99410 1973 101383
4
 19 march 2011 522p
maroun semaan
24 april 2006 700 38120 – 757 38877³ 24 april 2009 353p
19 march 2007 1000 43196 – 857 44053
4
 19 march 2010 415p
19 march 2008 12375 – 45629 905 46534
4
 19 march 2011 522p
amjad bseisu
24 april 2006 728 45268 – 899 46167³ 24 april 2009 353p
19 march 2007 1000 53328 – 1058 54386
4
 19 march 2010 415p
19 march 2008 923 – 44182 877 45059
4
 19 march 2011 522p
keith roberts
24 april 2006 714 47650 – 946 48596³ 24 april 2009 353p
19 march 2007 1000 55868 – 1109 56977
4
 19 march 2010 415p
19 march 2008 889  44182 877 45059
4
 19 march 2011 522p
1  dividends awarded on the shares granted under the psp are reinvested to buy further shares
2  the number of shares disclosed are the maximum number which can vest under the performance conditions attached to awards made under the psp the 
performance conditions under which these awards would vest in full are explained on pages 69 and 70
3  no shares awarded to executive directors under the psp have either lapsed or vested during the year however shares awarded on 24 april 2006 have satisfied their 
performance conditions in full the end of the relevant three year performance period having concluded at 31 december 2008 shares awarded on 24 april 2006 will 
therefore vest 100 on 24 april 2009 based on a share price of 484p which is the share price at 13 february 2009 being the latest practicable date prior to the 
adoption of this report by the remuneration committee the values of psp awards made to the executive directors on 24 april 2006 would be as follows ayman 
asfari £352806 maroun semaan £188168 amjad bseisu £223448 and keith roberts £235204
4  shares awarded on 19 march 2007 and 19 march 2008 are not due to vest until 19 march 2010 and 2011 respectively it is too early in the committee’s opinion to 
provide shareholders with a meaningful assessment to the extent that these shares will vest if at all
governance
73
petrofac annual report 
and accounts 2008 directors’ remuneration report directors’ remuneration report continued
award of shares under the dbsp
keith roberts was granted 31153 shares under the dbsp on 24 april 2006 the award was made solely in respect of invested shares  
no matching shares were granted following the award of dividend shares in 2006 2007 and 2008 the number of invested shares was 
31768 shares and 32399 shares respectively on 31 december 2007 and 31 december 2008 the award will vest on the third anniversary 
of grant subject to keith roberts’ continued employment the market price at the date of grant was 353p 
sums paid to third parties in respect of executive directors’ services
no sums were paid to third parties in respect of any executive director’s services 2007 nil
directors’ beneficial shareholdings
directors’ personal shareholdings which include family interests and which are not related to their remuneration have been disclosed 
under the requirements of the ukla listing rules and are as follows
       number of number of 
      shares as at shares as at 
     31 december 2008 31 december 2007 
executive directors
ayman asfari      53782114 69282114
maroun semaan      30568799 33068799
keith roberts      2120000 2120000
nonexecutive directors
rodney chase      800000 1000000
kjell almskog      400000 400000
bernard de combret      700000 600000
michael press      240000 240000
rijnhard van tets      100000 100000
the company’s share price at the end of the financial year was 34600 pence and the market price during the year was in the range 
28925 pence to 73850 pence 
changes since the year end
there have been no changes since the year end to the information disclosed in this report 
annual general meeting approval
the remuneration report will be submitted for approval to the annual general meeting to be held on friday 15 may 2009
on behalf of the board
bernard de combret
chairman of the remuneration committee
6 march 2009
74
petrofac annual report 
and accounts 2008 statement of directors’ responsibilities
directors’ responsibilities
the directors are responsible for preparing the annual report the group financial statements and the parent company financial 
statements in accordance with applicable jersey law and generally accepted accounting principles the directors have chosen to prepare 
the group financial statements and the parent company financial statements in accordance with international financial reporting 
standards the directors are also responsible for the preparation of the remuneration report and corporate governance report which 
they have chosen to prepare being under no obligation to do so under jersey law
jersey company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the 
state of affairs of the company and of the profit or loss of the company for that period in preparing these financial statements the 
directors should
 select suitable accounting policies and then apply them consistently
■ ■
 make judgements and estimates that are reasonable and prudent
■ ■
 specify which generally accepted accounting principles have been adopted in their preparation
■ ■
 prepare the financial statements on a going concern basis unless it is inappropriate to presume that the company will continue 
■ ■
in business
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial 
position of the company and enable them to ensure that the financial statements comply with the law they are also responsible  
for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and  
other irregularities
the directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s 
website legislation in jersey governing the preparation and dissemination of financial statements may differ from legislation in  
other jurisdictions 
directors’ approach
the board’s objective is to present a balanced and understandable assessment of the company’s position and prospects particularly in 
the annual report half year report formerly the interim report and other published documents and reports to regulators the board has 
established an audit committee to assist with this obligation 
going concern 
the financial statements have been prepared on a going concern basis since the directors have reasonable expectation that firstly the 
company’s and group’s activities are sustainable and secondly that adequate resources are available to continue operations for the 
foreseeable future 
governance
75
petrofac annual report 
and accounts 2008 statement of directors’ responsibilities we have audited the group financial statements of petrofac limited 
‘the company’ and its subsidiaries together ‘the group’ for the 
year ended 31 december 2008 which comprise the consolidated 
income statement the consolidated balance sheet the 
consolidated cash flow statement the consolidated statement of 
changes in equity and the related notes 1 to 32 these group 
financial statements have been prepared under the accounting 
policies set out therein
we have reported separately on the parent company financial 
statements of petrofac limited for the year ended 31 december 
2008 and on the information in the directors’ remuneration report 
that is described as having been audited 
this report is made solely to the company’s members as a body 
in accordance with article 110 of the companies jersey law 1991 
and the terms of our letter of engagement our audit work has been 
undertaken so that we might state to the company’s members 
those matters we are required to state to them in an auditors’ 
report and for no other purpose to the fullest extent permitted by 
law we do not accept or assume responsibility to anyone other 
than the company and the company’s members as a body for our 
audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report and 
the group financial statements in accordance with applicable 
jersey law and international financial reporting standards are set 
out in the statement of directors’ responsibilities the directors 
are also responsible for the preparation of the corporate 
governance report which they have chosen to prepare 
our responsibility is to audit the group financial statements in 
accordance with relevant legal and regulatory requirements and 
international standards on auditing uk and ireland
we report to you our opinion as to whether the group financial 
statements give a true and fair view and whether the group financial 
statements have been properly prepared in accordance with the 
companies jersey law 1991 
in addition we report to you if in our opinion we have not received 
all the information and explanations we require for our audit 
the company has also instructed us to review whether the 
corporate governance report reflects the company’s compliance 
with the nine provisions of the 2006 combined code which for a 
listed ukincorporated company are specified for review by the 
company’s auditor by the listing rules of the financial services 
authority and we report if it does not we are not required to 
consider whether the board’s statements on internal control cover 
all risks and controls or form an opinion on the effectiveness of the 
group’s corporate governance procedures or its risk and control 
procedures
we read other information contained in the annual report and 
consider whether it is consistent with the audited group financial 
statements the other information comprises only the chairman’s 
statement the interview with the group chief executive the 
operating and financial review the corporate social 
responsibility report the directors’ information the corporate 
governance report the unaudited part of the directors’ 
remuneration report the shareholder information and the oil  
gas reserves unaudited we consider the implications for our 
report if we become aware of any apparent misstatements or 
material inconsistencies with the group financial statements our 
responsibilities do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with international standards 
on auditing uk and ireland issued by the auditing practices 
board an audit includes examination on a test basis of evidence 
relevant to the amounts and disclosures in the group financial 
statements it also includes an assessment of the significant 
estimates and judgements made by the directors in the preparation 
of the group financial statements and of whether the accounting 
policies are appropriate to the group’s circumstances consistently 
applied and adequately disclosed
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary in 
order to provide us with sufficient evidence to give reasonable 
assurance that the group financial statements are free from material 
misstatement whether caused by fraud or other irregularity or 
error in forming our opinion we also evaluated the overall adequacy 
of the presentation of information in the group financial statements
opinion
in our opinion
 the group financial statements give a true and fair view in 
■ ■
accordance with international financial reporting standards of 
the state of the group’s affairs as at 31 december 2008 and of its 
profit for the year then ended and
 the group financial statements have been properly prepared in 
■ ■
accordance with the companies jersey law 1991
ernst  young llp
london
6 march 2009
independent auditors’ report
to the members of petrofac limited
76
petrofac annual report 
and accounts 2008 consolidated income statement
for the year ended 31 december 2008
       2008 2007
      notes us’000 us’000
revenue      4a 3329536 2440251
cost of sales      4b 2751063 2029772
gross profit        578473 410479
selling general and administration expenses     4e 227765 165308
other income      4c 7421 3951
other expenses      4d 2543 621
profit from operations before tax and finance incomecosts     355586 248501
finance costs      5 13906 8527
finance income      5 16688 18259
profit before tax       358368 258233
income tax expense      6 93379 69517 
profit for the year attributable to petrofac limited shareholders     264989 188716
        as restated
earnings per share us cents      7
 basic       7803 5514
 diluted       7711 5461
the attached notes 1 to 32 form part of these consolidated financial statements
77
petrofac annual report 
and accounts 2008 
consolidated 
income statement
financial statements consolidated balance sheet
at 31 december 2008
        as restated
       2008 2007
      notes us’000 us’000
assets
noncurrent assets
property plant and equipment      9 413064 256237
goodwill      11 97534 71743
intangible assets      12 38353 9010
availableforsale financial assets      14 566 1586
derivative financial instruments      15 7227 1775
other financial assets      15 1899 23
deferred income tax assets      6c 46444 11472
        605087 351846
current assets
inventories      16 4077 2256
work in progress      17 252695 270181
trade and other receivables       18 700931 509025
due from related parties      30 2907 3147
derivative financial instruments      15 5631 27298
other financial assets      15 4078 2702
cash and shortterm deposits      19 694415 581552
        1664734 1396161
total assets       2269821 1748007
equity and liabilities
equity attributable to petrofac limited shareholders
share capital      20 8636 8636
share premium       68203 68203
capital redemption reserve       10881 10881
shares to be issued      10 1988 –
treasury shares      21 69333  29842
other reserves      23 39292 87433
retained earnings       577739 377450
        558822 522761
minority interests       209 209
total equity       559031 522970
noncurrent liabilities
interestbearing loans and borrowings       24 88188 81640
provisions      25 29663 19046
other financial liabilities      26 32265 13870
deferred income tax liabilities      6c 38196 34137
        188312 148693
current liabilities
trade and other payables      27 513329 408017
due to related parties      30 559 744
interestbearing loans and borrowings      24 54412 28455
other financial liabilities      26 6362 864
income tax payable       110428 47577
billings in excess of cost and estimated earnings     17 285527 208105
accrued contract expenses      28 551861 382582
        1522478 1076344
total liabilities       1710790 1225037
total equity and liabilities       2269821 1748007
the financial statements on pages 77 to 118 were approved by the board of directors on 6 march 2009 and signed on its behalf by 
keith roberts – chief financial officer
the attached notes 1 to 32 form part of these consolidated financial statements
78
petrofac annual report 
and accounts 2008 consolidated cash flow statement
for the year ended 31 december 2008
        as restated
       2008 2007
      notes us’000 us’000
operating activities
profit before tax        358368 258233
adjustments for
 depreciation amortisation impairment and writeoff     4b 4e 63366 52758
 sharebased payments      4f 9448 5412
 difference between other longterm employment benefits  
  paid and amounts recognised in the income statement     9007 5852
 net finance income      5 2782 9732
 loss gain on disposal of property plant and equipment     4b4c 41 8834
 gain on disposal of held for sale assets      4c – 243
 other noncash items net       11303 1756
operating profit before working capital changes      448751 305202
trade and other receivables       194817 170531
work in progress       17486 97688
due from related parties       240 4578
inventories       1821 313
other current financial assets       1680 395
trade and other payables       104708 64044
billings in excess of cost and estimated earnings      77422 83115
accrued contract expenses       117505 12455
due to related parties       185 562
        567609 371495
other noncurrent items net       1927 133
cash generated from operations       565682 371628
interest paid       11526 7004
income taxes paid net       67418 32417
net cash flows from operating activities       486738 332207
investing activities
purchase of property plant and equipment      9 255542 117157
acquisition of subsidiaries net of cash acquired     10 40774 4902
payment of deferred consideration on acquisition     10 – 64
purchase of intangible oil  gas assets      12 37036 48604
purchase of availableforsale financial assets      – –
proceeds from disposal of property plant and equipment      1031 12166
interest received       16704 18562
net cash flows used in investing activities      315617 139999
financing activities
proceeds from interestbearing loans and borrowings      25000 –
repayment of interestbearing loans and borrowings      6213 2767
shareholders loan note transactions net       – 216
treasury shares purchased      21 42500 21698
equity dividends paid       64135 39479
net cash flows used in financing activities      87848 63728
net increase in cash and cash equivalents      83273 128480
cash and cash equivalents at 1 january       565886 437406
cash and cash equivalents at 31 december     19 649159 565886
the attached notes 1 to 32 form part of these consolidated financial statements
79
petrofac annual report 
and accounts 2008
financial statements
consolidated
cash flow statement  attributable to shareholders of petrofac limited
 
 issued  capital
 share share redemption shares to treasury other  retained  minority total
 capital premium reserve  be issued shares reserves earnings total interests equity
 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
     note 21 note 23
balance at 1 january 2008  
 as previously reported 8636 68203 10881 – 29842 50467 377450 485795 209 486004
restatement – – – – – 36966 – 36966 – 36966
balance at 1 january 2008 
 as restated 8636 68203 10881 – 29842 87433 377450 522761 209 522970
foreign currency translation – – – – – 84232 – 84232 – 84232
net gains on maturity of cash flow 
 hedges recycled in the year – – – – – 32103 – 32103 – 32103
net changes in fair value of  
 derivatives and financial assets 
 designated as cash flow hedges – – – – – 25907 – 25907 – 25907
net changes in the fair value of 
 availableforsale financial assets – – – – – 879 – 879 – 879
impairment of availableforsale 
 financial assets – – – – – 355 – 355 – 355
total income and expenses for  
 the year recognised in equity – – – – – 142766 – 142766 – 142766
net profit for the year – – – – – – 264989 264989 – 264989
total income and expenses for the year – – – – – 142766 264989 122223 – 122223
shares to be issued on acquisition  
 note 10 – – – 1988 – – – 1988 – 1988
sharebased payments charge  
 note 22 – – – – – 9448 – 9448 – 9448
shares vestedforfeited  
 during the year note 21 – – – – 3009 3009 – – – –
treasury shares purchased note 21 – – – – 42500 – – 42500 – 42500
transfer to reserve for sharebased  
 payments note 22 – – – – – 9602 – 9602 – 9602
dividends note 8 – – – – – – 64700 64700 – 64700
balance at 31 december 2008 8636 68203 10881 1988 69333 39292 577739 558822 209 559031
 shares held by petrofac employee benefit trust
the attached notes 1 to 32 form part of these consolidated financial statements
consolidated statement of changes in equity
for the year ended 31 december 2008
80
petrofac annual report 
and accounts 2008  attributable to shareholders of petrofac limited
 
  issued  capital
  share share redemption treasury other  retained  minority total
  capital premium reserve  shares reserves earnings total interests equity
  us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
     note 21 note 23
balance at 1 january 2007  
 as previously reported  8629 66210 10881 8144 19611 227508 324695 209 324904
restatement  – – – – 19213 – 19213 – 19213
balance at 1 january 2007 as restated   8629 66210 10881 8144 38824 227508 343908 209 344117
foreign currency translation  – – – – 72 – 72 – 72
net gains on maturity of cash flow 
 hedges recycled in the year  – – – – 22183 – 22183 – 22183
net changes in fair value of derivatives  
 and financial assets designated as  
 cash flow hedges  – – – – 59487 – 59487 – 59487
net changes in the fair value of  
 availableforsale financial assets  – – – – 140 – 140 – 140
total income and expenses for the  
 year recognised in equity  – – – – 37092 – 37092 – 37092
net profit for the year  – – – – – 188716 188716 – 188716
total income and expenses for the year  – – – – 37092 188716 225808 – 225808
sharebased payments charge note 22  – – – – 5412 – 5412 – 5412
shares issued on acquisition note 20  7 1993 – – – – 2000 – 2000
treasury shares purchased note 21  – – – 21698 – – 21698 – 21698
transfer to reserve for sharebased  
 payments note 22  – – – – 6105 – 6105 – 6105
dividends note 8  – – – – – 38774 38774 – 38774
balance at 31 december 2007 as restated   8636 68203 10881 29842 87433 377450 522761 209 522970
 shares held by petrofac employee benefit trust
the attached notes 1 to 32 form part of these consolidated financial statements
81
petrofac annual report 
and accounts 2008
financial statements
consolidated statement 
of changes in equity 1 corporate information 
the consolidated financial statements of petrofac limited the 
“company” for the year ended 31 december 2008 were 
authorised for issue in accordance with a resolution of the directors 
on 6 march 2009 
petrofac limited is a limited liability company registered in jersey 
under the companies jersey law 1991 and is the holding 
company for the international group of petrofac subsidiaries 
together “the group” the company’s 31 december 2008 financial 
statements are shown on pages 120 to 131 the group’s principal 
activity is the provision of facilities solutions to the oil  gas 
production and processing industry
a full listing of all group companies and joint venture companies is 
contained in note 32 to these consolidated financial statements
2 summary of significant accounting policies
basis of preparation
the consolidated financial statements have been prepared on a 
historical cost basis except for derivative financial instruments and 
availableforsale financial assets which have been measured at fair 
value the presentation currency of the consolidated financial 
statements is united states dollars and all values in the financial 
statements are rounded to the nearest thousand us’000 except 
where otherwise stated certain comparative information has been 
reclassified to conform to current period presentation and prior 
period earnings per shares numbers have been revised to be 
consistent with the current period presentation
statement of compliance
the consolidated financial statements of petrofac limited and its 
subsidiaries have been prepared in accordance with international 
financial reporting standards ifrs and applicable requirements 
of jersey law 
basis of consolidation
the consolidated financial statements comprise the financial 
statements of petrofac limited and its subsidiaries the financial 
statements of its subsidiaries are prepared for the same reporting 
year as the company and where necessary adjustments are made 
to the financial statements of the group’s subsidiaries to bring their 
accounting policies into line with those of the group
subsidiaries are consolidated from the date on which control is 
transferred to the group and cease to be consolidated from the 
date on which control is transferred out of the group control is 
achieved where the company has the power to govern the financial 
and operating policies of an investee entity so as to obtain benefits 
from its activities all intragroup balances and transactions 
including unrealised profits have been eliminated on consolidation 
minority interests in subsidiaries consolidated by the group are 
disclosed separately from the group’s equity and income 
statement losses attributable to minority interests in excess of the 
minority’s interest in the net assets of the subsidiary are adjusted 
against the interest of the group unless there is a binding obligation 
on the part of the minority to contribute additional investment in 
the subsidiary
new standards and interpretations
the group has adopted new and revised standards and 
interpretations issued by the international accounting standards 
board iasb and the international financial reporting 
interpretations committee ifric of the iasb that are relevant  
to its operations and effective for accounting periods beginning 
on or after 1 january 2008 the principal effects of the adoption 
of these new and amended standards and interpretations are 
discussed below
ifric 11 ‘ifrs 2 group and treasury share transactions’
this interpretation clarifies that where any arrangement is made 
whereby an employee is granted rights to an entity’s equity 
instruments it is to be accounted for as an equitysettled scheme 
this treatment would also hold true where the entity buys the 
instruments from an existing shareholder or any other party to 
provide the equity instruments to the employee the adoption of 
this interpretation did not affect the group’s operating results or 
financial position for the year ended 31 december 2008
ifric 14 ‘ias19 the limit on a defined benefit asset minimum 
funding requirements and their interaction’
this interpretation provides guidance on how to assess the limit 
on the amount of surplus in a defined benefit scheme that can  
be recognised as an asset under ias 19 employee benefits  
the adoption of this interpretation did not affect the group’s 
operating results or financial position for the year ended 
31 december 2008 as the group does not have any defined  
benefit schemes for its employees
ias 39 ‘financial instruments recognition and measurement’ 
and ifrs7 ‘financial instruments disclosures – 
reclassification of financial assets amendments’
these amendments in ias 39 and ifrs7 permit reclassification of 
certain financial instruments held for trading and available for sale 
categories these amendments did not affect the group’s operating 
results or financial position for the year ended 31 december 2008 
certain new standards amendments to and interpretations of 
existing standards have been issued and are effective for the 
group’s accounting periods beginning on or after 1 january 2009 
or later periods which the group has not early adopted those that 
are applicable to the group are as follows
 
■ ■
ias 1 ‘presentation of financial statements revised’ 
effective for annual periods beginning on or after 1 january 2009 
has been revised to enhance the usefulness of information 
presented in the financial statements management is considering 
the approach to meeting this requirement
 
■ ■
ifrs 2 ‘amendments to ifrs 2 – vesting conditions and 
cancellations’ is required to be applied to periods beginning on 
or after 1 january 2009 this amendment clarifies the definition of 
nonvesting conditions and prescribes accounting treatment of an 
award that is cancelled because a nonvesting condition is not 
satisfied this will have no significant impact on the group’s 
financial statements
 
■ ■
ifrs 3 ‘business combinations revised’ and the amended 
version of ias 27 ‘consolidated and separate financial 
statements’ effective for annual periods beginning on or after 
1 july 2009 have been enhanced to amongst other matters 
specify the accounting treatments for acquisition costs 
contingent consideration preexisting relationships and 
reacquired rights the revised standards include detailed 
guidance in respect of step acquisitions and partial disposals of 
subsidiaries and associates as well as in respect of allocation of 
income to noncontrolling interests further an option has been 
added to ifrs 3 to permit an entity to recognise 100 per cent of 
notes to the consolidated financial statements
at 31 december 2008
82
petrofac annual report 
and accounts 2008 the goodwill of an acquired entity not just the acquiring entity’s 
portion of the goodwill the impact of this standard on the group 
is not expected to be significant
ifrs 8 ‘operating segments’
■ ■
 introduces the management 
approach to segment reporting ifrs 8 which becomes 
mandatory for the group’s 2009 financial information will require 
the disclosure of segment information based on the internal 
reports regularly reviewed by the group’s chief operating 
decision maker in order to assess each segment’s performance 
and allocate resources to them the adoption of this standard 
does not have any impact on the financial position of the group 
however the segment information disclosed will change as a 
result of the recent internal restructuring of the group which is 
further discussed on page 18
 revisions to ias 23 ‘borrowing costs’
■ ■
 have removed the option 
of immediately recognising as an expense borrowing costs that 
relate to assets that take a substantial period of time to get ready 
for use or sale an entity is therefore required to capitalise 
borrowing costs as part of the cost of such assets the revised 
standard applies to borrowing costs relating to qualifying assets 
for which the commencement date for capitalisation is on or after 
1 january 2009 this will have no significant impact on the group
 ias 27 ‘consolidated and separate financial statements 
■ ■
– cost of an investment in a subsidiary jointly controlled 
entity or associate amendments’ effective for annual periods 
beginning on or after 1 january 2009 has deleted the use of the 
‘cost method’ of accounting for investments with respect to 
holding companies’ separate financial statements also in cases 
of reorganisations where a new parent is introduced above an 
existing one the cost of the subsidiary is the previous carrying 
amount rather than its fair value this will impact the separate 
financial statements of parent companies within the group but 
does not have any impact on the consolidated financial 
statements of the group
 
■ ■
ias 32 ‘financial instruments presentation of financial 
statements – puttable financial instruments and obligations 
arising on liquidation amendments’ effective for annual 
periods beginning on or after 1 january 2009 requires the 
classification of puttable financial instruments as equity if they 
have certain specified features this will have no impact on  
the group
 
■ ■
ifric 16 ‘hedges of a net investment in a foreign operation’ 
this interpretation provides guidance in respect of hedges of 
foreign currency gains and losses on a net investment in a foreign 
operation this interpretation is effective for periods beginning on 
or after 1 october 2008 the impact on the group is not 
considered to be significant
 
■ ■
ias 39 ‘financial instruments recognition and measurement 
– eligible hedged item amendment’ is effective for periods 
beginning on or after 1 july 2009 this amendment addresses 
only the designation of a onesided risk in a hedged item and the 
designation of inflation as a hedged risk or a portion in particular 
situations this will have no impact on the group
other interpretations and amendments that have been issued but 
are not yet effective and are not considered applicable to the group 
are ifric 13 ‘customer loyalty programmes’ ifric 15 
‘agreements for the construction of real estate’ and ifrs 1 
‘firsttime adoption of ifrs – cost of an investment in a subsidiary 
jointly controlled entity or associate amendments’
significant accounting judgements and estimates
judgements
in the process of applying the group’s accounting policies 
management has made the following judgements apart from those 
involving estimations which have the most significant effect on the 
amounts recognised in the financial statements
 revenue recognition on fixedprice engineering procurement and 
■ ■
construction contracts the group recognises revenue on 
fixedprice engineering procurement and construction contracts 
using the percentageofcompletion method based on surveys  
of work performed the group has determined this basis of 
revenue recognition is the best available measure of progress  
on such contracts
estimation uncertainty
the key assumptions concerning the future and other key sources 
of estimation uncertainty at the balance sheet date that have a 
significant risk of causing a material adjustment to the carrying 
amounts of assets and liabilities within the next financial year are 
discussed below
 project cost to complete estimates at each balance sheet date 
■ ■
the group is required to estimate costs to complete on fixed price 
contracts estimating costs to complete on such contracts 
requires the group to make estimates of future costs to be 
incurred based on work to be performed beyond the balance 
sheet date
 onerous contract provisions the group provides for future losses 
■ ■
on longterm contracts where it is considered probable that the 
contract costs are likely to exceed revenues in future years 
estimating these future losses involves a number of assumptions 
about the achievement of contract performance targets and the 
likely levels of future cost escalation over time
 impairment of goodwill the group determines whether goodwill is 
■ ■
impaired at least on an annual basis this requires an estimation 
of the value in use of the cashgenerating units to which the 
goodwill is allocated estimating the value in use requires the 
group to make an estimate of the expected future cash flows from 
each cashgenerating unit and also to determine a suitable 
discount rate in order to calculate the present value of those cash 
flows the carrying amount of goodwill at 31 december 2008 was 
us97534000 2007 us71743000
 deferred tax assets the group recognises deferred tax assets on 
■ ■
unused tax losses where it is probable that future taxable profits 
will be available for utilisation this requires management to make 
judgements and assumptions regarding the amount of deferred 
tax that can be recognised as well as the likelihood of future 
taxable profits the carrying amount of recognised tax losses at 
31 december 2008 was us33165000 2007 us8512000
 income tax the company and its subsidiaries are subject to 
■ ■
routine tax audits and also a process whereby tax computations 
are discussed and agreed with the appropriate authorities whilst 
the ultimate outcome of such tax audits and discussions cannot 
be determined with certainty management estimates the level of 
provisions required for both current and deferred tax on the basis 
of professional advice and the nature of current discussions with 
the tax authority concerned
 recoverable value of intangible oil  gas and other intangible 
■ ■
assets the group determines at each balance sheet date whether 
there is any evidence of impairment in the carrying value of its 
intangible oil  gas and other intangible assets this requires 
management to estimate the recoverable value of its intangible 
assets for example by reference to quoted market values similar 
arms length transactions involving these assets or value in  
use calculations
 units of production depreciation estimated proven plus probable 
■ ■
reserves are used in determining the depreciation of oil  gas 
assets such that the depreciation charge is proportional to the 
depletion of the remaining reserves over their life of production 
these calculations require the use of estimates and assumptions 
including the amount of economically recoverable reserves and 
estimates of future oil  gas capital expenditure
83
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated
financial statements notes to the consolidated financial statements continued
at 31 december 2008
oil  gas facilities 10 – 125
plant and equipment 4 – 33
buildings and leasehold improvements  5 – 33
or shorter of the lease term
office furniture and equipment  25 – 100
vehicles 20 – 33
tangible oil  gas assets are depreciated on a fieldbyfield basis 
using the unitofproduction method based on entitlement to 
proven and probable reserves taking account of estimated future 
development expenditure relating to those reserves 
each asset’s estimated useful life residual value and method of 
depreciation are reviewed and adjusted if appropriate at each 
financial year end
no depreciation is charged on land or assets under construction 
the carrying amount of an item of property plant and equipment is 
derecognised on disposal or when no future economic benefits are 
expected from its use or disposal the gain or loss arising from the 
derecognition of an item of property plant and equipment shall be 
included in profit or loss when the item is derecognised gains are 
not classified as revenue
noncurrent assets held for sale
noncurrent assets or disposal groups are classified as held for 
sale when it is expected that the carrying amount of an asset will 
be recovered principally through sale rather than continuing use 
assets are not depreciated when classified as held for sale
borrowing costs
borrowing costs directly attributable to the construction of 
qualifying assets which are assets that necessarily take a 
substantial period of time to prepare for their intended use are 
added to the cost of those assets until such time as the assets are 
substantially ready for their intended use all other borrowing costs 
are recognised as interest payable in the income statement in the 
period in which they are incurred
goodwill 
goodwill acquired in a business combination is initially measured at 
cost being the excess of the cost of the business combination over 
the net fair value of the identifiable assets liabilities and contingent 
liabilities of the entity at the date of acquisition following initial 
recognition goodwill is measured at cost less any accumulated 
impairment losses goodwill is reviewed for impairment annually or 
more frequently if events or changes in circumstances indicate that 
such carrying value may be impaired
for the purpose of impairment testing goodwill acquired is 
allocated to the cashgenerating units that are expected to benefit 
from the synergies of the combination each unit or units to which 
goodwill is allocated represents the lowest level within the group at 
which the goodwill is monitored for internal management purposes 
and is not larger than a segment based on either the group’s 
primary or the group’s secondary reporting format determined in 
accordance with ias14 ‘segment reporting’
impairment is determined by assessing the recoverable amount of 
the cashgenerating units to which the goodwill relates where the 
recoverable amount of the cashgenerating units is less than the 
carrying amount of the cashgenerating units and related goodwill 
an impairment loss is recognised
2 summary of significant accounting policies continued
interests in joint ventures 
the group has a number of contractual arrangements with other 
parties which represent joint ventures these take the form of 
agreements to share control over other entities ‘jointly controlled 
entities’ and commercial collaborations ‘jointly controlled 
operations’ the group’s interests in jointly controlled entities are 
accounted for by proportionate consolidation which involves 
recognising its proportionate share of the joint venture’s assets 
liabilities income and expenses with similar items in the 
consolidated financial statements on a linebyline basis where the 
group collaborates with other entities in jointly controlled 
operations the expenses the group incurs and its share of the 
revenue earned is recognised in the income statement assets 
controlled by the group and liabilities incurred by it are recognised 
in the balance sheet where necessary adjustments are made to 
the financial statements of the group’s jointly controlled entities and 
operations to bring their accounting policies into line with those of 
the group
foreign currency translation
the company’s functional and presentational currency is united 
states dollars in the accounts of individual subsidiaries 
transactions in currencies other than a company’s functional 
currency are recorded at the prevailing rate of exchange at the date 
of the transaction at the year end monetary assets and liabilities 
denominated in foreign currencies are retranslated at the rates of 
exchange prevailing at the balance sheet date nonmonetary 
assets and liabilities that are measured at historical cost in a foreign 
currency are translated using the rate of exchange as at the dates 
of the initial transactions nonmonetary assets and liabilities 
measured at fair value in a foreign currency are translated using the 
rate of exchange at the date the fair value was determined all 
foreign exchange gains and losses are taken to the income 
statement with the exception of exchange differences arising on 
monetary assets and liabilities that form part of the group’s net 
investment in subsidiaries these are taken directly to equity until 
the disposal of the net investment at which time they are 
recognised in the income statement 
the balance sheets of overseas subsidiaries and joint ventures are 
translated into us dollars using the closing rate method whereby 
assets and liabilities are translated at the rates of exchange 
prevailing at the balance sheet date the income statements of 
overseas subsidiaries and joint ventures are translated at average 
exchange rates for the year exchange differences arising on the 
retranslation of net assets are taken directly to a separate 
component of equity
on the disposal of a foreign entity accumulated exchange 
differences are recognised in the income statement as a 
component of the gain or loss on disposal 
property plant and equipment 
property plant and equipment is stated at cost less accumulated 
depreciation and any impairment in value cost comprises the 
purchase price or construction cost and any costs directly 
attributable to making that asset capable of operating as intended 
the purchase price or construction cost is the aggregate amount 
paid and the fair value of any other consideration given to acquire 
the asset depreciation is provided on a straightline basis other 
than on oil  gas assets at the following rates
84
petrofac annual report 
and accounts 2008 development expenditures
expenditure relating to development of assets which include the 
construction installation and completion of infrastructure facilities 
such as platforms pipelines and development wells is capitalised 
within property plant and equipment
changes in unitofproduction factors
changes in factors which affect unitofproduction calculations are 
dealt with prospectively not by immediate adjustment of prior 
years’ amounts
decommissioning
provision for future decommissioning costs is made in full when the 
group has an obligation to dismantle and remove a facility or an 
item of plant and to restore the site on which it is located and when 
a reasonable estimate of that liability can be made the amount 
recognised is the present value of the estimated future expenditure 
an amount equivalent to the discounted initial provision for 
decommissioning costs is capitalised and amortised over the life of 
the underlying asset on a unitofproduction basis over proven and 
probable reserves any change in the present value of the 
estimated expenditure is reflected as an adjustment to the provision 
and the oil  gas asset 
the unwinding of the discount applied to future decommissioning 
provisions is included under finance costs in the income statement
availableforsale financial assets
investments classified as availableforsale are initially stated at fair 
value including acquisition charges associated with the investment
after initial recognition availableforsale financial assets are 
measured at their fair value using quoted market rates gains and 
losses are recognised as a separate component of equity until the 
investment is sold or impaired at which time the cumulative gain or 
loss previously reported in equity is included in the income 
statement
impairment of assets excluding goodwill
at each balance sheet date the group reviews the carrying 
amounts of its tangible and intangible assets to assess whether 
there is an indication that those assets may be impaired if any such 
indication exists the group makes an estimate of the asset’s 
recoverable amount an asset’s recoverable amount is the higher 
of an asset’s fair value less costs to sell and its value in use in 
assessing value in use the estimated future cash flows attributable 
to the asset are discounted to their present value using a pretax 
discount rate that reflects current market assessments of the time 
value of money and the risks specific to the asset 
if the recoverable amount of an asset is estimated to be less than 
its carrying amount the carrying amount of the asset is reduced 
to its recoverable amount an impairment loss is recognised 
immediately in the income statement unless the relevant asset is 
carried at a revalued amount in which case the impairment loss is 
treated as a revaluation decrease
where an impairment loss subsequently reverses the carrying 
amount of the asset is increased to the revised estimate of its 
recoverable amount but so that the increased carrying amount 
does not exceed the carrying amount that would have been 
determined had no impairment loss been recognised for the asset 
in prior years a reversal of an impairment loss is recognised 
immediately in the income statement unless the relevant asset is 
carried at a revalued amount in which case the reversal of the 
impairment is treated as a revaluation increase 
where goodwill has been allocated to cashgenerating units and 
part of the operation within those units is disposed of the goodwill 
associated with the operation disposed of is included in the 
carrying amount of the operation when determining the gain or  
loss on disposal of the operation goodwill disposed of in this 
circumstance is measured based on the relative values of the 
operation disposed of and the portion of the cashgenerating  
units retained
deferred consideration payable on acquisition
when as part of a business combination the group defers a 
proportion of the total purchase consideration payable for an 
acquisition the amount provided for is calculated based on the 
best estimate of the timing of additional payments discounted back 
to present value with the discount factor element recognised as a 
finance cost in the income statement
intangible assets – non oil  gas assets
intangible assets acquired in a business combination are initially 
measured at cost being their fair values at the date of acquisition 
and are recognised separately from goodwill as the asset is 
separable or arises from a contractual or other legal right and its 
fair value can be measured reliably after initial recognition 
intangible assets are carried at cost less accumulated amortisation 
and any accumulated impairment losses intangible assets with a 
finite life are amortised over their useful economic life using a 
straight line method unless a better method reflecting the pattern 
in which the asset’s future economic benefits are expected to be 
consumed can be determined the amortisation charge in respect 
of intangible assets is included in the selling general and 
administration expenses line of the income statement the 
expected useful lives of assets are reviewed on an annual basis 
any change in the useful life or pattern of consumption of the 
intangible asset is treated as a change in accounting estimate and 
is accounted for prospectively by changing the amortisation period 
or method intangible assets are tested for impairment whenever 
there is an indication that the asset may be impaired
oil  gas assets
capitalised costs
the group’s activities in relation to oil  gas assets are limited to 
assets in the evaluation development and production phases
oil  gas evaluation and development expenditure is accounted for 
using the successful efforts method of accounting
evaluation expenditures
expenditure directly associated with evaluation or appraisal 
activities is capitalised as an intangible asset such costs include 
the costs of acquiring an interest appraisal well drilling costs 
payments to contractors and an appropriate share of directly 
attributable overheads incurred during the evaluation phase for 
such appraisal activity which may require drilling of further wells 
costs continue to be carried as an asset whilst related 
hydrocarbons are considered capable of commercial development 
such costs are subject to technical commercial and management 
review to confirm the continued intent to develop or otherwise 
extract value when this is no longer the case the costs are 
writtenoff in the income statement when such assets are 
declared part of a commercial development related costs are 
transferred to tangible oil  gas assets all intangible oil  gas 
assets are assessed for any impairment prior to transfer and any 
impairment loss is recognised in the income statement
85
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated
financial statements notes to the consolidated financial statements continued
at 31 december 2008
derecognition of financial assets and liabilities
financial assets
a financial asset or where applicable a part of a financial asset is 
derecognised where
 the rights to receive cash flows from the asset have expired
■ ■
the group retains the right to receive cash flows from the asset 
■ ■
but has assumed an obligation to pay them in full without material 
delay to a third party under a ‘passthrough’ arrangement or
 the group has transferred its rights to receive cash flows from the 
■ ■
asset and either a has transferred substantially all the risks and 
rewards of the asset or b has neither transferred nor retained 
substantially all the risks and rewards of the asset but has 
transferred control of the asset
financial liabilities
a financial liability is derecognised when the obligation under the 
liability is discharged or cancelled or expires
if an existing financial liability is replaced by another from the same 
lender on substantially different terms or the terms of an existing 
liability are substantially modified such an exchange or modification 
is treated as a derecognition of the original liability and the 
recognition of a new liability such that the difference in the 
respective carrying amounts together with any costs or fees 
incurred are recognised in the income statement
pensions and other longterm employment benefits
the group has various defined contribution pension schemes in 
accordance with the local conditions and practices in the countries 
in which it operates the amount charged to the income statement 
in respect of pension costs reflects the contributions payable in the 
year differences between contributions payable during the year 
and contributions actually paid are shown as either accrued 
liabilities or prepaid assets in the balance sheet
the group’s other longterm employment benefits are provided in 
accordance with the labour laws of the countries in which the 
group operates further details of which are given in note 25
sharebased payment transactions
employees including directors of the group receive remuneration 
in the form of sharebased payment transactions whereby 
employees render services in exchange for shares or rights over 
shares ‘equitysettled transactions’ 
equitysettled transactions
the cost of equitysettled transactions with employees is measured 
by reference to the fair value at the date on which they are granted 
in valuing equitysettled transactions no account is taken of any 
performance conditions other than conditions linked to the price of 
the shares of petrofac limited ‘market conditions’ if applicable
the cost of equitysettled transactions is recognised together with 
a corresponding increase in equity over the period in which the 
relevant employees become fully entitled to the award the ‘vesting 
period’ the cumulative expense recognised for equitysettled 
transactions at each reporting date until the vesting date reflects 
the extent to which the vesting period has expired and the group’s 
best estimate of the number of equity instruments that will 
ultimately vest the income statement charge or credit for a period 
represents the movement in cumulative expense recognised as at 
the beginning and end of that period
2 summary of significant accounting policies continued
inventories
inventories are valued at the lower of cost and net realisable value 
net realisable value is the estimated selling price in the ordinary 
course of business less estimated costs of completion and the 
estimated costs necessary to make the sale cost comprises 
purchase price cost of production transportation and other 
directly allocable expenses costs of inventories other than raw 
materials are determined using the firstinfirstout method  
costs of raw materials are determined using the weighted  
average method
work in progress and billings in excess of cost and estimated 
earnings
fixed price lump sum engineering procurement and construction 
contracts are presented in the balance sheet as follows
 for each contract the accumulated cost incurred as well as the 
■ ■
estimated earnings recognised at the contract’s percentage of 
completion less provision for any anticipated losses after 
deducting the progress payments received or receivable from the 
customers are shown in current assets in the balance sheet 
under “work in progress”
 where the payments received or receivable for any contract 
■ ■
exceed the cost and estimated earnings less provision for any 
anticipated losses the excess is shown as “billings in excess of 
cost and estimated earnings” within current liabilities
trade and other receivables 
trade receivables are recognised and carried at original invoice 
amount less an allowance for any amounts estimated to be 
uncollectable an estimate for doubtful debts is made when there is 
objective evidence that the collection of the full amount is no longer 
probable under the terms of the original invoice impaired debts are 
derecognised when they are assessed as uncollectable 
cash and cash equivalents
cash and cash equivalents consist of cash at bank and in hand 
and shortterm deposits with an original maturity of three months 
or less for the purpose of the cash flow statement cash and cash 
equivalents consists of cash and cash equivalents as defined 
above net of outstanding bank overdrafts
interestbearing loans and borrowings
all interestbearing loans and borrowings are initially recognised at 
the fair value of the consideration received net of issue costs 
directly attributable to the borrowing
after initial recognition interestbearing loans and borrowings are 
subsequently measured at amortised cost using the effective 
interest rate method amortised cost is calculated by taking  
into account any issue costs and any discount or premium  
on settlement
provisions
provisions are recognised when the group has a present legal or 
constructive obligation as a result of past events it is probable that 
an outflow of resources will be required to settle the obligation and 
a reliable estimate can be made of the amount of the obligation if 
the time value of money is material provisions are discounted using 
a current pretax rate that reflects where appropriate the risks 
specific to the liability where discounting is used the increase in 
the provision due to the passage of time is recognised in the 
income statement as a finance cost
86
petrofac annual report 
and accounts 2008 the incentive payments can be measured reliably claims are only 
included in revenue when negotiations have reached an advanced 
stage such that it is probable the claim will be accepted and can be 
measured reliably
facilities management engineering and training services 
operations services
revenues from reimbursable contracts are recognised in the period 
in which the services are provided based on the agreed contract 
schedule of rates 
revenues from fixedprice contracts are recognised on the 
percentageofcompletion method measured by milestones 
completed or earned value once the outcome of a contract can be 
estimated reliably in the early stages of contract completion when 
the outcome of a contract cannot be estimated reliably contract 
revenues are recognised only to the extent of costs incurred that 
are expected to be recoverable
incentive payments are included in revenue when the contract is 
sufficiently advanced that it is probable that the specified 
performance standards will be met or exceeded and the amount of 
the incentive payments can be measured reliably claims are only 
included in revenue when negotiations have reached an advanced 
stage such that it is probable the claim will be accepted and can be 
measured reliably
oil  gas activities energy developments
oil  gas revenues comprise the group’s share of sales from the 
processing or sale of hydrocarbons on an entitlement basis when 
the significant risks and rewards of ownership have been passed to 
the buyer
income taxes
income tax expense represents the sum of current income tax and 
deferred tax 
current income tax assets and liabilities for the current and prior 
periods are measured at the amount expected to be recovered 
from or paid to the taxation authorities taxable profit differs from 
profit as reported in the income statement because it excludes 
items of income or expense that are taxable or deductible in other 
years and it further excludes items that are never taxable or 
deductible the group’s liability for current tax is calculated using 
tax rates that have been enacted or substantively enacted by the 
balance sheet date
deferred income tax is recognised on all temporary differences at 
the balance sheet date between the carrying amounts of assets 
and liabilities in the financial statements and the corresponding  
tax bases used in the computation of taxable profit with the 
following exceptions
 where the temporary difference arises from the initial recognition 
■ ■
of goodwill or of an asset or liability in a transaction that is not a 
business combination that at the time of the transaction affects 
neither accounting nor taxable profit or loss
 in respect of taxable temporary differences associated with 
■ ■
investments in subsidiaries associates and joint ventures where 
the timing of reversal of the temporary differences can be 
controlled and it is probable that the temporary differences will 
not reverse in the foreseeable future and
 deferred income tax assets are recognised only to the extent that 
■ ■
it is probable that a taxable profit will be available against which 
the deductible temporary differences carried forward tax credits 
or tax losses can be utilised
no expense is recognised for awards that do not ultimately vest 
except for awards where vesting is conditional upon a market 
condition which are treated as vesting irrespective of whether or 
not the market condition is satisfied provided that all other 
performance conditions are satisfied equity awards cancelled are 
treated as vesting immediately on the date of cancellation and any 
expense not recognised for the award at that date is recognised in 
the income statement
petrofac employee benefit trust
the petrofac employee benefit trust was established on 7 march 
2007 to warehouse ordinary shares purchased to satisfy various 
new share scheme awards made to the employees of the 
company which will be transferred to the members of the scheme 
on their respective vesting dates subject to satisfying the 
performance conditions of each scheme the trust has been 
consolidated in the financial statements in accordance with sic 12 
‘special purpose entities’ the cost of shares temporarily held by 
petrofac employee benefit trust are reflected as treasury shares 
and deducted from equity
leases
the determination of whether an arrangement is or contains a 
lease is based on the substance of the arrangement at inception 
date of whether the fulfilment of the arrangement is dependent on 
the use of a specific asset or assets or the arrangement conveys 
the right to use the asset
the group has entered into various operating leases the payments 
for which are recognised as an expense in the income statement 
on a straightline basis over the lease terms
revenue recognition
revenue is recognised to the extent that it is probable economic 
benefits will flow to the group and the revenue can be reliably 
measured the following specific recognition criteria also apply
engineering procurement and construction services 
engineering  construction
revenues from fixedprice lumpsum contracts are recognised on 
the percentageofcompletion method based on surveys of work 
performed once the outcome of a contract can be estimated 
reliably in the early stages of contract completion when the 
outcome of a contract cannot be estimated reliably contract 
revenues are recognised only to the extent of costs incurred that 
are expected to be recoverable 
revenues from costplusfee contracts are recognised on the basis 
of costs incurred during the year plus the fee earned measured by 
the costtocost method
revenues from reimbursable contracts are recognised in the period 
in which the services are provided based on the agreed contract 
schedule of rates
provision is made for all losses expected to arise on completion of 
contracts entered into at the balance sheet date whether or not 
work has commenced on these contracts
incentive payments are included in revenue when the contract is 
sufficiently advanced that it is probable that the specified 
performance standards will be met or exceeded and the amount of 
87
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated
financial statements notes to the consolidated financial statements continued
at 31 december 2008
the group formally designates and documents the relationship 
between the hedging instrument and the hedged item at the 
inception of the transaction as well as its risk management 
objectives and strategy for undertaking various hedge transactions 
the documentation also includes identification of the hedging 
instrument the hedged item or transaction the nature of risk being 
hedged and how the group will assess the hedging instrument’s 
effectiveness in offsetting the exposure to changes in the hedged 
item’s fair value or cash flows attributable to the hedged risk the 
group also documents its assessment both at hedge inception and 
on an ongoing basis of whether the derivatives that are used in the 
hedging transactions are highly effective in offsetting changes in 
fair values or cash flows of the hedged items
the treatment of gains and losses arising from revaluing derivatives 
designated as hedging instruments depends on the nature of the 
hedging relationship as follows
fair value hedges
for fair value hedges the carrying amount of the hedged item is 
adjusted for gains and losses attributable to the risk being hedged 
the derivative is remeasured at fair value and gains and losses from 
both are taken to the income statement for hedged items carried 
at amortised cost the adjustment is amortised through the income 
statement such that it is fully amortised by maturity
the group discontinues fair value hedge accounting if the hedging 
instrument expires or is sold terminated or exercised the hedge no 
longer meets the criteria for hedge accounting or the group revokes 
the designation
cash flow hedges
for cash flow hedges the effective portion of the gain or loss on 
the hedging instrument is recognised directly in equity while the 
ineffective portion is recognised in the income statement amounts 
taken to equity are transferred to the income statement when the 
hedged transaction affects the income statement
if the hedging instrument expires or is sold terminated or exercised 
without replacement or rollover or if its designation as a hedge is 
revoked any cumulative gain or loss existing in equity at that time 
remains in equity and is recognised when the forecast transaction 
is ultimately recognised in the income statement when a forecast 
transaction is no longer expected to occur the cumulative gain or 
loss that was reported in equity is immediately transferred to the 
income statement
embedded derivatives
contracts are assessed for the existence of embedded derivatives 
at the date that the group first becomes party to the contract  
with reassessment only if there is a change to the contract that 
significantly modifies the cash flows embedded derivatives  
which are not clearly and closely related to the underlying asset 
liability or transaction are separated and accounted for as stand 
alone derivatives
2 summary of significant accounting policies continued
income taxes continued
the carrying amount of deferred income tax assets is reviewed at 
each balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profit will be available to 
allow all or part of the deferred income tax assets to be utilised 
unrecognised deferred income tax assets are reassessed at each 
balance sheet date and are recognised to the extent that it has 
become probable that future taxable profit will allow the deferred 
tax asset to be recovered
deferred income tax assets and liabilities are measured on an 
undiscounted basis at the tax rates that are expected to apply 
when the asset is realised or the liability is settled based on tax 
rates and tax laws enacted or substantively enacted at the balance 
sheet date
current and deferred income tax is charged or credited directly to 
equity if it relates to items that are credited or charged to equity 
otherwise income tax is recognised in the income statement
derivative financial instruments and hedging 
the group uses derivative financial instruments such as forward 
currency contracts interest rate collars and swaps and oil price 
collars and forward contracts to hedge its risks associated with 
foreign currency interest rate and oil price fluctuations such 
derivative financial instruments are initially recognised at fair value 
on the date on which a derivative contract is entered into and are 
subsequently remeasured at fair value derivatives are carried as 
assets when the fair value is positive and as liabilities when the fair 
value is negative
any gains or losses arising from changes in the fair value of 
derivatives that do not qualify for hedge accounting are taken to the 
income statement 
the fair value of forward currency contracts is calculated by 
reference to current forward exchange rates for contracts with 
similar maturity profiles the fair value of interest rate cap swap 
and oil price collar contracts is determined by reference to market 
values for similar instruments
for the purposes of hedge accounting hedges are classified as
 fair value hedges when hedging the exposure to changes in the 
■ ■
fair value of a recognised asset or liability or
 cash flow hedges when hedging exposure to variability in cash 
■ ■
flows that is either attributable to a particular risk associated  
with a recognised asset or liability or a highly probable  
forecast transaction
88
petrofac annual report 
and accounts 2008 3 segment information 
the group’s primary operations are organised on a worldwide basis into three business segments engineering  construction operations 
services and energy developments the accounting policies of the segments are the same as those described in note 2 above the group 
accounts for intersegment sales as if the sales were to third parties that is at arms length prices the group evaluates the performance of 
its segments and allocates resources to them based on this evaluation 
the group’s secondary segment reporting format is geographical geographical segments are based on the location of the group’s assets 
sales to external customers disclosed in geographical segments are based on the geographical location of its customers
business segments
the following tables present revenue and profit information and certain asset and liability information relating to the group’s business 
segments for the years ended 31 december 2008 and 2007 included within the corporate consolidation and eliminations columns are 
certain balances which due to their nature are not allocated to segments
year ended 31 december 2008
       consolidation
   engineering  operations energy corporate adjustments  
   construction services developments  others eliminations total
   us’000 us’000 us’000 us’000 us’000 us’000
revenue
external sales   2212704 963475 153357 – – 3329536
intersegment sales   6698 18945 – – 25643 –
total revenue   2219402 982420 153357 – 25643 3329536
segment results   265853 46737 51713 1176 215 362912
unallocated corporate costs   – – – 7326 – 7326
profitloss before tax and finance incomecosts  265853 46737 51713 8502 215 355586
finance costs   380 4190 8247 7547 6458 13906
finance income   19522 903 224 8075 12036 16688
profitloss before income tax   284995 43450 43690 7974 5793 358368
income tax expenseincome   60919 11641 21810 571 1562 93379
profitloss for the year   224076 31809 21880 8545 4231 264989
year ended 31 december 2007
       consolidation
   engineering  operations energy corporate adjustments  
   construction services developments  others eliminations total
   us’000 us’000 us’000 us’000 us’000 us’000
revenue
external sales   1409817 897602 132832 – – 2440251
intersegment sales   5131 13372 – – 18503 –
total revenue   1414948 910974 132832 – 18503 2440251
segment results   158197 44891 51637 236 51 254540
unallocated corporate costs   – – – 6039 – 6039
profitloss before tax and finance incomecosts  158197 44891 51637 6275 51 248501
finance costs   662 4384 205 8572 5296 8527
finance income   18013 1247 331 3857 5189 18259
profitloss before income tax   175548 41754 51763 10990 158 258233
income tax expenseincome   38454 12857 18375 169 – 69517
profitloss for the year   137094 28897 33388 10821 158 188716
89
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated
financial statements notes to the consolidated financial statements continued
at 31 december 2008
3 segment information continued 
business segments continued
year ended 31 december 2008
       consolidation 
   engineering  operations energy corporate  adjustments  
   construction services developments others eliminations total
   us’000 us’000 us’000 us’000 us’000 us’000
assets and liabilities
segment assets   1638278 406229 450813 – 305049 2190271
intersegment assets   292538 12117 394 – 305049 –
investments   – – 566 – – 566
    1345740 394112 450985 – – 2190837
unallocated assets   – – – 32540 – 32540
income tax assets   6406 2395 37162 919 438 46444
total assets   1352146 396507 488147 33459 438 2269821
segment liabilities   1136732 271371 407711 – 362664 1453150
intersegment liabilities   3846 35726 323092 – 362664 –
    1132886 235645 84619 – – 1453150
unallocated liabilities   – – – 109016 – 109016
income tax liabilities   90679 11270 46231 882 438 148624
total liabilities   1223565 246915 130850 109898 438 1710790
other segment information
capital expenditures
property plant and equipment   55976 8156 197718 325 6633 255542
intangible oil  gas assets   – – 37036 – – 37036
other intangible assets   – 12009 – – – 12009
goodwill   – 52353 – – – 52353
charges
depreciation   19253 4264 22254 425 840 45356
amortisation   – 2829 – – – 2829
impairment   – – 5355 – – 5355
writeoff of intangible oil  gas assets   – – 9826 – – 9826
other longterm employment benefits   7870 2240 60 53 – 10223
sharebased payments   4706 2313 1059 1370 – 9448
90
petrofac annual report 
and accounts 2008 year ended 31 december 2007
       consolidation 
   engineering  operations energy corporate  adjustments  
   construction services developments others eliminations total
   us’000 us’000 us’000 us’000 us’000 us’000
assets and liabilities
segment assets   1222444 339682 244500 – 86438 1720188
intersegment assets   82050 4388 – – 86438 –
investments   – – 1586 – – 1586
    1140394 335294 246086 – – 1721774
unallocated assets   – – – 14761 – 14761
income tax assets   2895 1000 13650 618 6691 11472
total assets   1143289 336294 259736 15379 6691 1748007
segment liabilities   824166 219248 173303 – 178559 1038158
intersegment liabilities   9621 43731 125207 – 178559 –
    814545 175517 48096 – – 1038158
unallocated liabilities   – – – 105165 – 105165
income tax liabilities   53175 10147 23767 1316 6691 81714
total liabilities   867720 185664 71863 106481 6691 1225037
other segment information
capital expenditures
property plant and equipment   44683 6447 66484 130 587 117157
intangible oil  gas assets   – – 49700 – – 49700
other intangible assets   – 2369 – – – 2369
goodwill   – 14233 – – – 14233
charges
depreciation   15654 4567 22476 449 845 42301
amortisation   – 1771 – – – 1771
impairment   – – 8686 – – 8686
other longterm employment benefits   5075 1492 7 31 – 6605
sharebased payments   2667 1382 589 774 – 5412
91
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
3 segment information continued 
geographical segments
the following tables present revenue assets and capital expenditure by geographical segments for the years ended 31 december 2008 
and 2007
year ended 31 december 2008
    middle east  cis  
     africa asia pacific europe americas consolidated
    us’000 us’000 us’000 us’000 us’000
segment revenue    1744623 791141 785256 8516 3329536
carrying amount of segment assets    1355000 325733 581655 7433 2269821
capital expenditure
property plant and equipment    72508 13802 169022 210 255542
intangible oil  gas assets    – 27210 9826 – 37036
other intangible assets    – – 12009 – 12009
goodwill    – – 52353 – 52353
year ended 31 december 2007
    middle east  cis
     africa asia pacific europe americas consolidated
    us’000 us’000 us’000 us’000 us’000
segment revenue    1104569 513083 815707 6892 2440251
carrying amount of segment assets    1131287 247972 360140 8608 1748007
capital expenditure
property plant and equipment    85169 17640 14261 87 117157
intangible oil  gas assets    – 15927 33773 – 49700
other intangible assets    2369 – – – 2369
goodwill    14233 – – – 14233
4 revenues and expenses
a revenue
       2008  2007
       us’000 us’000
rendering of services       3214782 2346431
sale of crude oil  gas       102036 85592
sale of processed hydrocarbons       12718 8228
        3329536 2440251
included in revenues from rendering of services are operations services revenues of a ‘passthrough’ nature with zero or low margins 
amounting to us275947000 2007 us227048000
b cost of sales
included in cost of sales for the year ended 31 december 2008 is us88000 2007 us8590000 gain loss on disposal of property 
plant and equipment used to undertake various engineering and construction contracts in addition depreciation charged on property 
plant and equipment of us39143000 during 2008 2007 us37759000 is included in cost of sales note 9
also included in cost of sales are forward points and ineffective portions on derivatives designated as cash flow hedges of us11826000 
2007 nil
92
petrofac annual report 
and accounts 2008 c other income
       2008  2007
       us’000 us’000
foreign exchange gains       6134 3003
gain on sale of property plant and equipment      47 244
gain on sale of asset held for sale       – 243
other income       1240 461
        7421 3951
d other expenses
       2008  2007
       us’000 us’000
foreign exchange losses       1932 441
other expenses       611 180
        2543 621
e selling general and administration expenses 
       2008  2007
       us’000 us’000
staff costs       125039 93915
depreciation       6213 4542
amortisation note 12       2829 1771
impairment note 12 and 14       5355 8686
writeoff of intangible oil  gas assets note 12      9826 –
other operating expenses       78503 56394
        227765 165308
other operating expenses consist mainly of office travel legal and professional and contracting staff costs
f staff costs 
       2008  2007
       us’000 us’000
total staff costs
wages and salaries       682869 603324
social security costs       28892 29544
defined contribution pension costs       11948 11927
other longterm employee benefit costs note 25      10223 6605
expense of sharebased payments note 22      9448 5412
        743380 656812
of the us743380000 of staff costs shown above us618341000 2007 us562897000 are included in cost of sales with the 
remainder in selling general and administration expenses
the average number of persons employed by the group during the year was 10383 2007 9027
g auditors’ remuneration 
the group paid the following amounts to its auditors in respect of the audit of the financial statements and for other services provided to 
the group
       2008  2007
       us’000 us’000
audit of the group financial statements       1177 945
other fees to auditors
auditing the accounts of subsidiaries       236 197
other services relating to taxation       107 89
all other services       46 95
        1566 1326
93
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
5 finance costsincome
       2008  2007
       us’000 us’000
interest payable
longterm borrowings       2888 4921
other interest including shortterm loans and overdrafts      1239 2092
unwinding of discount on deferred consideration and decommissioning provisions    1910 1514
ineffective foreign currency cash flow hedge       8157 –
time value portion of derivatives designated as hedges note 31     288 –
total finance cost       13906 8527
interest receivable
bank interest receivable       15989 18255
other interest receivable       699 4
total finance income       16688 18259
6 income tax
a tax on ordinary activities
the major components of income tax expense are as follows
       2008  2007
       us’000 us’000
current income tax
current income tax charge       128243 69436
adjustments in respect of current income tax of previous years     4373 228
deferred income tax
relating to origination and reversal of temporary differences     33393 688
adjustments in respect of deferred income tax of previous years     5844 379
income tax expense reported in the income statement       93379 69517
b reconciliation of total tax charge
a reconciliation between the income tax expense and the product of accounting profit multiplied by the company’s domestic tax rate 
is as follows
       2008  2007
       us’000 us’000
accounting profit before tax       358368 258233
at jersey’s domestic income tax rate of 20 2007 20     71674 51647
profits exempt from jersey income tax        71674 51647
higher income tax rates of other countries including withholding taxes     92922 89884
overhead allowances – high rate jurisdiction      4484 14456
expenditure not allowable for income tax purposes – high rate jurisdiction    6192 3256
income not taxable – high rate jurisdiction       415 –
adjustments in respect of previous periods        1470 615
tax effect of utilisation of tax losses not previously recognised     312 183
unrecognised tax losses       946 86
losses recognised in the period       – 8455
at the effective income tax rate of 261 2007 269     93379 69517
for the year to 31 december 2008 the company obtained jersey exempt company status and was therefore exempt from jersey income 
tax on nonjersey source income and bank interest by concession from 1 january 2009 the jersey exempt company status regime has 
been abolished and under the new regime the company will be charged tax in jersey at the rate of 0 no material impact to the income 
tax expense is expected as a result of this change
94
petrofac annual report 
and accounts 2008 c deferred income tax
deferred income tax relates to the following
   consolidated balance sheet consolidated income statement
    
     2008 2007 2008 2007
     us’000 us’000 us’000 us’000
deferred income tax liabilities
fair value adjustment on acquisitions     3610 1940 800 453
accelerated depreciation     23065 903 19778 502
other temporary differences     11521 31294 18094 8334
gross deferred income tax liabilities     38196 34137  
deferred income tax assets
losses available for offset     33165 8512 28747 6661
decelerated depreciation for tax purposes     5893 1558 3932 655
share scheme     2799 716 3024 716
other temporary differences     4587 686 4418 42
gross deferred income tax assets     46444 11472
deferred income tax creditcharge        39237 309
d unrecognised tax losses
deferred income tax assets are recognised for tax loss carryforwards and tax credits to the extent that the realisation of the related  
tax benefit through the future taxable profits is probable the group did not recognise deferred income tax assets of us20732000  
2007 us19672000
       2008 2007
       us’000 us’000
expiration dates for tax losses
on completion of the contract       – 2600
no earlier than 2022       11906 11972
no expiration date       6534 5100
        18440 19672
tax credits no expiration date       2292 –
        20732 19672
7 earnings per share 
basic earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted 
average number of ordinary shares outstanding during the year
diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders after adjusting for any 
dilutive effect by the weighted average number of ordinary shares outstanding during the year 
the following reflects the income and share data used in calculating basic and diluted earnings per share
       2008 2007
       us’000 us’000
net profit attributable to ordinary shareholders for basic and diluted earnings per share   264989 188716
       2008 2007
       number number
       ’000 ’000
weighted average number of ordinary shares for basic earnings per share    339585 342246
effect of diluted potential ordinary shares granted under sharebased payment schemes   4072 3313
adjusted weighted average number of ordinary shares for diluted earnings per share    343657 345559
95
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
8 dividends paid and proposed
       2008 2007
       us’000 us’000
declared and paid during the year
equity dividends on ordinary shares
final dividend for 2006 643 cents per share      – 22018
interim dividend 2007 490 cents per share      – 16756
final dividend for 2007 1150 cents per share      39164 –
interim dividend 2008 750 cents per share      25536 –
        64700 38774
       2008 2007
       us’000 us’000
proposed for approval at agm
not recognised as a liability as at 31 december
equity dividends on ordinary shares
final dividend for 2008 1790 cents per share 2007 1150 cents per share     61831 39725
9 property plant and equipment
   land
   buildings   office 
   and   furniture capital 
 oil  gas oil  gas  leasehold plant and  and work in  
 assets facilities improvements equipment vehicles equipment progress total
 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
cost
at 1 january 2007 28780 124740 21462 20986 6684 34445 9075 246172
additions 65078 631 1170 6604 1092 20593 21989 117157
acquisition of subsidiaries – – – – – 47 – 47
transfer from intangible  
 oil  gas assets note 12 41657 – – – – – – 41657
disposals – – 1642 4514 3378 2187 – 11721
exchange difference – – 257 520 45 522 – 304
at 1 january 2008 135515 125371 21247 22556 4443 53420 31064 393616
additions 189214 – 35018 2935 2516 25859 – 255542
acquisition of subsidiaries – – 190 – – 534 – 724
transfer from capital work  
 in progress – – 31064 – – – 31064 –
disposals – – 723 683 318 875 – 2599
exchange difference 45626 – 3708 2573 67 9891 – 61865
at 31 december 2008 279103 125371 83088 22235 6574 69047 – 585418
depreciation
at 1 january 2007 802 60169 4288 15162 4790 17785 – 102996
charge for the year 8072 13491 1321 1277 1676 16464 – 42301
disposals – – 1568 1637 3030 2154 – 8389
exchange difference – – 19 247 31 174 – 471
at 1 january 2008 8874 73660 4060 15049 3467 32269 – 137379
charge for the year 7748 13366 5346 2598 1052 15246 – 45356
disposals – – 544 20 237 726 – 1527
exchange difference 435 – 879 1115 47 6378 – 8854
at 31 december 2008 16187 87026 7983 16512 4235 40411 – 172354
net carrying amount 
at 31 december 2008 262916 38345 75105 5723 2339 28636 – 413064
at 31 december 2007 126641 51711 17187 7507 976 21151 31064 256237
no interest has been capitalised within oil  gas facilities during the year 2007 nil and the accumulated capitalised interest net of 
depreciation at 31 december 2008 was us1430000 2007 us1929000 
96
petrofac annual report 
and accounts 2008 additions to oil  gas assets in the year mainly comprise development expenses capitalised on the group’s interest in the don area  
assets of us167265000 2007 us33773000 depreciation has not been charged on this asset as commercial production has  
not yet started
included in oil  gas assets are us2879000 2007 us1315000 of capitalised decommissioning costs net of depreciation provided on 
the pm304 asset in malaysia chergui asset in tunisia and the don area assets in the united kingdom
of the total charge for depreciation in the income statement us39143000 2007 us37759000 is included in cost of sales and 
us6213000 2007 us4542000 in selling general and administration expenses
capital work in progress comprises of expenditures incurred on the construction of a new office building in sharjah united arab emirates 
during 2008 this was transferred to land buildings and leasehold improvements on commencing use of the building
10 business combinations
acquisitions in 2008
eclipse petroleum technology limited
on 25 july 2008 the group acquired a 100 interest in the share capital of eclipse petroleum technology limited eclipse a specialist 
production engineering company the consideration for the acquisition inclusive of transaction costs of sterling 195000 equivalent 
us388000 was sterling 8150000 equivalent us16200000 the consideration of sterling 7955000 equivalent us15812000 
excluding transaction costs comprised of sterling 6000000 equivalent us11927000 in cash sterling 1000000 equivalent 
us1988000 to be satisfied with 158177 ordinary shares vesting in two years’ time and the balance being the discounted value of 
deferred consideration amounting to sterling 955000 equivalent us1897000 payable based on the estimated future profitability of 
eclipse the deferred consideration in no event will exceed an additional amount of sterling 9000000 equivalent us17892000 
the provisional fair values of the identifiable assets and liabilities of eclipse on completion of the acquisition are analysed below
       recognised on  carrying
       acquisition value
       us’000 us’000
property plant and equipment       673 673
intangible assets        2402 223
trade and other receivables       3407 3407
cash and shortterm deposits       571 571
total assets       7053 4874
less
deferred tax liability       610 –
trade and other payables       2483 2483
total liabilities       3093 2483
fair value of net assets acquired       3960 2391
goodwill arising on acquisition        12240 
consideration at acquisition       16200
        us’000
cash outflow on acquisition translated at the payment date  
cash acquired with subsidiary        571
cash paid on acquisition        12002
legal and professional expenses paid on acquisition       351
net cash outflow on the acquisition of subsidiary       11782
intangible assets recognised on acquisition comprise a proprietary software system which is being amortised over its remaining economic 
useful life of six years on a straightline basis
the residual goodwill above comprises the fair value of expected future synergies and business opportunities arising from the integration of 
the business into the group
from the date of acquisition eclipse has contributed a net loss of us436000 to the net profit of the group after charging us475000 of 
post acquisition costs relating to amortisation of intangibles and finance costs in respect of deferred consideration payable 
97
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
10 business combinations continued
acquisitions in 2008 continued
caltec limited
on 29 august 2008 the group acquired a 100 interest in the share capital of caltec limited caltec a specialist production technology 
company for a consideration of sterling 26776000 equivalent us48956000 including transaction costs of sterling 596000 
equivalent us1093000 the consideration of sterling 26180000 equivalent us47863000 excluding transaction costs comprised 
of sterling 15699000 equivalent us28641000 in cash as initial consideration and working capital adjustments and the balance being 
the discounted value of deferred consideration of sterling 10481000 equivalent us19222000 payable based on the expected 
achievement of future performance targets set for the company the deferred consideration in no event will exceed an additional amount of 
sterling 15000000 equivalent us27510000
the provisional fair values of the identifiable assets and liabilities of caltec on completion of the acquisition are analysed below
       recognised on  carrying
       acquisition value
       us’000 us’000
property plant and equipment       51 51
intangible assets        10021 191
trade and other receivables       2105 2105
cash and shortterm deposits       966 966
total assets       13143 3313
less
deferred tax liability       2753 –
trade and other payables       1547 1547
total liabilities       4300 1547
fair value of net assets acquired       8843 1766
goodwill arising on acquisition        40113 
consideration at acquisition       48956
        us’000
cash outflow on acquisition translated at the payment date
cash acquired with subsidiary        966
cash paid on acquisition        28911
legal and professional expenses paid on acquisition       1047
net cash outflow on the acquisition of subsidiary       28992
intangible assets recognised on acquisition represent patented technology which is being amortised over its remaining economic useful life 
of ten years on a straightline basis
the residual goodwill above comprises the fair value of expected future synergies and business opportunities arising from the integration of 
the business into the group
from the date of acquisition caltec has contributed a net loss of us657000 to the net profit of the group after charging us821000 of 
post acquisition costs relating to amortisation of intangibles and finance costs in respect of deferred consideration payable 
if the above combinations had taken place at the beginning of the year net profit of the group would have been us262738000 and 
revenue would have been us3340269000
acquisitions in 2007
spd group limited
on 16 january 2007 the group acquired a 51 interest in the share capital of spd group limited spd a specialist provider of well 
operations services the consideration for the acquisition of the 51 interest inclusive of transaction costs of us172000 was 
us7872000 consideration of us7700000 excluding transaction costs was settled by a cash payment of us3935000 issuance of 
loan notes payable of us1765000 and the balance of us2000000 by issuance of 274938 new ordinary shares of the company at 
market value on 19 january 2007 to the vendor over three years in equal instalments on the anniversary of the transaction on 27 
december 2007 the outstanding loan notes of us1765000 were repaid to the vendors
the terms of the sale and purchase agreement for the remaining 49 interest in the share capital of spd which convey call option rights on 
the acquirer and minority shareholder put option rights over these shares and the respective rights to dividends and share of profits of the 
two parties are such that this transaction has been accounted for as a 100 acquisition of the business by the group the discounted 
deferred consideration for the remaining 49 of the share capital of spd was originally estimated at us12025000 based on the 
discounted value of an agreed multiple of the future earnings of spd and the total consideration for the 100 interest therefore including 
transaction costs amounted to us19897000 the fair value of net assets acquired was us5664000 which included intangible assets 
98
petrofac annual report 
and accounts 2008 recognised on acquisition of us2369000 these intangible assets recognised on acquisition comprise customer contracts which are 
being amortised over their remaining economic useful lives on a straightline basis note 12
during the year a charge of us1323000 2007 us1455000 for the unwinding of interest has been reflected in the income statement 
as an interest expense note 5
the deferred consideration was reassessed at year end in light of latest financial projections for the business and the current carried 
amount was considered to be appropriate 
the residual goodwill of us14233000 2007 us14233000 comprises the fair value of expected future synergies and business 
opportunities arising from the integration of the business into the group
11 goodwill
a summary of the movements in goodwill is presented below
       2008 2007
       us’000 us’000
at 1 january       71743 56732
acquisitions during the year note 10       52353 14233
exchange difference       26562 778
at 31 december       97534 71743
goodwill acquired through business combinations has been allocated to three groups of cashgenerating units which are reportable 
segments for impairment testing as follows
 facilities management comprising petrofac facilities management limited plant asset management limited spd eclipse and caltec
■ ■
 training comprising petrofac training limited and pps process control  instrumentation limited
■ ■
 energy developments comprising petrofac energy developments international limited
■ ■
these represent the lowest level within the group at which the goodwill is monitored for internal management purposes
facilities management and training cashgenerating units
the recoverable amounts for the facilities management and training units have been determined based on value in use calculations using 
discounted pretax cash flow projections management has adopted a ten year projection period to assess each unit’s value in use as it is 
confident based on past experience of the accuracy of longterm cash flow forecasts that these projections are reliable the cash flow 
projections are based on financial budgets approved by senior management covering a five year period extrapolated thereafter at a growth 
rate of 5 per annum management considers this a conservative longterm growth rate relative to both the economic outlook for the units 
in their respective markets within the oil  gas industry and the growth rates experienced in the recent past by each unit 
energy developments cashgenerating unit
the recoverable amount of the energy developments unit is also determined on a value in use calculation using discounted pretax cash 
flow projections based on financial budgets and economic parameters for the unit approved by senior management and covering a five 
year period as referred to in ias 36
carrying amount of goodwill allocated to each group of cashgenerating units
       2008 2007
       us’000 us’000
facilities management unit       77086 44769
training unit       18231 24757
energy developments unit       2217 2217
        97534 71743
key assumptions used in value in use calculations
the calculation of value in use for both the facilities management and training units is most sensitive to the following assumptions
market share the assumption relating to market share for the facilities management unit is based on the unit resecuring those existing 
customer contracts in the uk which are due to expire during the projection period for the training unit the key assumptions relate to 
management’s assessment of maintaining the unit’s market share in the uk and developing further the business in international markets
growth rate estimates are based on management’s assessment of market share having regard to macroeconomic factors and the growth 
rates experienced in the recent past by each unit a growth rate of 5 per annum has been applied for the remaining five years of the ten 
year projection period
net profit margins estimates are based on management’s assumption of achieving a level of performance at least in line with the recent 
past performance of each of the units
99
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
11 goodwill continued
key assumptions used in value in use calculations continued
discount rate management has used a pretax discount rate of 161 2007 98 per annum for facilities management cashgenerating 
unit and 151 2007 98 per annum for training cashgenerating unit which are derived from the estimated weighted average cost of 
capital of the group this discount rate has been calculated using an estimated riskfree rate of return adjusted for the group’s estimated 
equity market risk premium and the group’s cost of debt 
the calculation of value in use for the energy developments unit is most sensitive to the following assumptions
discount rate management has used an estimate of the pretax weighted average cost of capital of the group plus a risk premium to 
reflect the particular risk characteristics of each individual investment the discount rate used for 2008 was 114 for each asset 
2007 100
oil  gas prices management has used an oil price assumption of us55 2007 us55 per barrel and a gas price of us640 2007 na 
per mcf for the impairment testing of its individual oil  gas investments
reserve volumes and production profiles management has used its internally developed economic models of reserves and production as 
a basis of calculating value in use
sensitivity to changes in assumptions
with regard to the assessment of value in use of the cash generating units management believes that no reasonably possible change in 
any of the above key assumptions would cause the carrying value of the relevant unit to exceed its recoverable amount after giving due 
consideration to the macroeconomic outlook for the oil  gas industry and the commercial arrangements with customers underpinning 
the cash flow forecasts for each of the units
12 intangible assets
       2008 2007
       us’000 us’000
intangible oil  gas assets
cost
at 1 january       15927 16788
additions       37036 49700
disposals       – 8793
asset writtenoff       9826 –
transferred to tangible oil  gas assets note 9      – 41657
exchange difference       – 111
at 31 december       43137 15927
accumulated impairment
at 1 january       8686 –
impairment       5000 8686
at 31 december       13686 8686
net book value of intangible oil  gas assets at 31 december     29451 7241
other intangible assets
cost
at 1 january       3930 1561
additions on acquisition note 10       12009 2369
acquired intangible assets note 10       414 –
exchange difference       2461 –
at 31 december       13892 3930
accumulated amortisation
at 1 january       2161 390
amortisation       2829 1771
at 31 december       4990 2161
net book value of other intangible assets at 31 december     8902 1769
total intangible assets       38353 9010
100
petrofac annual report 
and accounts 2008 oil  gas asset additions above mainly comprise of us24658000 of capitalised expenditure on near field appraisal wells in the group’s 
30 interest in block pm304 offshore malaysia
prior year additions to oil  gas assets included us32673000 in respect of the don area development and us15927000 of well 
appraisal costs on permit ntp68
during the year us9826000 of capitalised development costs were writtenoff in respect of a dry exploration well
during the year an impairment provision of us5000000 was made against the group’s interest in permit ntp68 in australia due to the 
continuing uncertainties surrounding the commercial outcome of the project
there were investing cash outflows relating to capitalised intangible oil  gas assets of us37036000 2007 us48604000 in the 
current period arising from predevelopment activities as at 31 december 2008 there were cash and deposits of us495000 2007 
us3582000 trade and other receivables of nil 2007 us3106000 and trade and other payables of us508000 2007 
us4840000 arising from predevelopment activities in the current period
other intangible assets comprise the fair values of customer contracts proprietary software and patent technology note 10 arising on 
acquisition these intangible assets are being amortised over their remaining estimated economic useful life of three six and ten years 
respectively on a straightline basis and the related amortisation charges included in selling general and administrative expenses note 4e 
13 interest in joint ventures 
in the normal course of business the group establishes jointly controlled entities and operations for the execution of certain of its 
operations and contracts a list of these joint ventures is disclosed in note 32 the group’s share of assets liabilities revenues and 
expenses relating to jointly controlled entities and operations are as follows
       2008 2007
       us’000 us’000
revenue       28878 37140
cost of sales       21481 10990
gross profit        7397 26150
selling general and administration expenses      1200 1246
finance income net       87 42
profit before income tax       6284 24946
income tax       523 819
net profit        5761 24127
current assets       38295 46991
noncurrent assets       3644 3883
total assets       41939 50874
current liabilities       2446 12667
noncurrent liabilities       – 323
total liabilities       2446 12990
net assets       39493 37884
14 availableforsale financial assets
       2008 2007
       us’000 us’000
shares – listed       133 1022
units in a mutual fund       433 564
        566 1586
availableforsale financial assets consist of investments in the ordinary shares of quoted companies and units in a mutual fund and 
therefore have no fixed maturity date or coupon rate
during the year a provision for impairment of us355000 2007 nil was made against the above listed shares held as an availablefor
sale financial asset on the basis that the recent fall in the market value of these shares was considered to be significant
101
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
15 derivative financial instruments and other financial assets
       2008 2007
       us’000 us’000
noncurrent
fair value of derivative instruments note 31      7227 1775
other financial assets
restricted cash       1899 –
other       – 23
        1899 23
current
fair value of derivative instruments note 31      5631 27298
other financial assets
interest receivable       1047 1351
restricted cash        2736 1351
other       295 –
        4078 2702
restricted cash comprises deposits with financial institutions securing various guarantees and performance bonds associated with the 
group’s trading activities and cash in escrow against reimbursed longterm employee benefits charged to a customer this cash will be 
released on the maturity of these guarantees and performance bonds and on the transfercessation of employment of the relevant 
employee for which the longterm benefit is held in escrow
16 inventories
       2008 2007
       us’000 us’000
crude oil       1669 1173
processed hydrocarbons       805 18
stores and spares       744 732
raw materials       859 333
        4077 2256
included in the income statement are costs of inventories expensed of us22404000 2007 us23528000
17 work in progress and billings in excess of cost and estimated earnings
       2008 2007
       us’000 us’000
cost and estimated earnings       3782100 2194088
less billings       3529405 1923907
work in progress       252695 270181
billings       1509548 1114500
less cost and estimated earnings       1224021 906395
billings in excess of cost and estimated earnings      285527 208105
total cost and estimated earnings        5006121 3100483
total billings       5038953 3038407
102
petrofac annual report 
and accounts 2008 18 trade and other receivables
       2008 2007
       us’000 us’000
trade receivables       608023 453256
retentions receivable       2241 3450
advances       31977 19154
prepayments and deposits       24849 19450
other receivables       33841 13715
        700931 509025
trade receivables are noninterest bearing and are generally on 30 to 60 days’ terms trade receivables are reported net of provision for 
impairment the movements in the provision for impairment against trade receivables totalling us608023000 2007 us453256000 
are as follows
  2008 2007
   
   specific general  specific general 
   impairment impairment total impairment impairment total
   us’000 us’000 us’000 us’000 us’000 us’000
at 1 january   4086 1216 5302 5073 364 5437
charge for the year   1361 482 1843 2948 849 3797
amounts writtenoff   – 333 333 3555 – 3555
unused amounts reversed   1530 15 1545 382 – 382
exchange difference   219 54 273 2 3 5
at 31 december   3698 1296 4994 4086 1216 5302
at 31 december the analysis of trade receivables is as follows
   number of days past due
 neither past due 
 nor impaired  30 days 3160 days 6190 days 91120 days 121360 days  360 days total
 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
unimpaired 325844 197790 45106 11012 10460 12714 1319 604245
impaired – 734 86 618 666 3032 3636 8772
  325844 198524 45192 11630 11126 15746 4955 613017
less impairment provision – 190 85 194 249 1640 2636 4994
net trade receivables 2008 325844 198334 45107 11436 10877 14106 2319 608023
unimpaired 206327 176426 41030 16170 1937 4580 876 447346
impaired – 162 745 1865 1772 4653 2015 11212
  206327 176588 41775 18035 3709 9233 2891 458558
less impairment provision – 162 745 222 947 2040 1186 5302
net trade receivables 2007 206327 176426 41030 17813 2762 7193 1705 453256
the credit quality of trade receivables that are neither past due nor impaired is assessed by management with reference to externally 
prepared customer credit reports and the historic payment track records of the counterparties
advances represent payments made to certain of the group’s subcontractors for projects in progress on which the related work had not 
been performed at the balance sheet date
all trade and other receivables are expected to be settled in cash
certain trade and other receivables will be settled in cash using currencies other than the reporting currency of the group and will be 
largely paid in sterling and kuwaiti dinars
103
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
19 cash and shortterm deposits
       2008 2007
       us’000 us’000
cash at bank and in hand       107461 106454
shortterm deposits       586954 475098
total cash and bank balances       694415 581552
cash at bank earns interest at floating rates based on daily bank deposit rates shortterm deposits are made for varying periods of 
between one day and one month depending on the immediate cash requirements of the group and earn interest at respective shortterm 
deposit rates the fair value of cash and bank balances is us694415000 2007 us581552000
for the purposes of the cash flow statement cash and cash equivalents comprise the following
       2008 2007
       us’000 us’000
cash at bank and in hand       107461 106454
shortterm deposits       586954 475098
bank overdrafts note 24       45256 15666
        649159 565886
20 share capital
the share capital of the company as at 31 december was as follows
       2008 2007
       us’000 us’000
authorised
750000000 ordinary shares of us0025 each 2007 750000000 ordinary shares of us0025 each  18750 18750
issued and fully paid
345434858 ordinary shares of us0025 each 2007 345434858 ordinary shares of us0025 each  8636 8636
the movement in the number of issued and fully paid ordinary shares is as follows
        number
ordinary shares
ordinary shares of us0025 each at 1 january 2007       345159920
issued during the year on acquisition of a subsidiary note 10      274938
ordinary shares of us0025 each at 1 january 2008       345434858
movement during the year        –
ordinary shares of us0025 each at 31 december 2008      345434858
the share capital comprises only one class of ordinary shares the ordinary shares carry a voting right and the right to a dividend
21 treasury shares
for the purpose of making awards under its employee share schemes the company acquires its own shares which are held by the 
petrofac employee benefit trust all these shares have been classified in the balance sheet as treasury shares within equity
the movements in total treasury shares are shown below
   2008 2007
    
     number us’000 number us’000
at 1 january     4052024 29842 1500135 8144
acquired during the year     5854194 42500 2551889 21698
vestedforfeited during the year     365912 3009 – –
at 31 december     9540306 69333 4052024 29842
as at 31 december 2008 5504819 of the above shares were held by lehman brothers in a client custody account which is now being 
managed by their appointed administrator the company is currently in discussion with the administrator to procure the release of  
these shares
included in the above treasury shares are 274938 shares held in relation to the acquisition of spd group limited in 2007 note 10
104
petrofac annual report 
and accounts 2008 22 sharebased payment plans
performance share plan psp
under the performance share plan of the company share awards are granted to executive directors and a restricted number of other 
senior executives of the group the shares cliff vest at the end of three years subject to continued employment and the achievement of 
certain predefined nonmarket and market based performance conditions the nonmarket based condition governing the vesting of 50 
of the total award is subject to achieving between 15 and 25 earning per share eps growth targets over a three year period the fair 
values of the equitysettled award relating to the eps part of the scheme are estimated based on the quoted closing market price per 
company share at the date of grant with an assumed vesting rate per annum built into the calculation subsequently trued up at year end 
based on the actual leaver rate during the period from award date to year end over the three year vesting period of the plan the fair value 
and assumed vesting rates of the eps part of the scheme are shown below 
       fair value trued up
       per share vesting rate
2008 awards       522p 989
2007 awards       415p 971
2006 awards       353p 953
the remaining 50 market performance based part of these awards is dependent on the total shareholder return tsr of the group 
compared to an index composed of selected relevant companies the fair value of the shares vesting under this portion of the award is 
determined by an independent valuer using a monte carlo simulation model taking into account the terms and conditions of the plan rules 
and using the following assumptions at the date of grant
      2008 awards 2007 awards 2006 awards
expected share price volatility based on median of comparator group’s three year volatilities  320 290 280
share price correlation with comparator group     220 170 100
riskfree interest rate      379 520 460
expected life of share award      3 years 3 years 3 years
fair value of tsr portion      287p 245p 234p
the following shows the movement in the number of shares held under the psp scheme outstanding but not exercisable
       2008 2007
       number number
outstanding at 1 january       864181 431194
granted during the period       456240 449537
forfeited during the period       21612 16550
outstanding at 31 december       1298809 864181
the number of awards still outstanding but not exercisable at 31 december 2008 is made up of 451178 in respect of 2008 awards 
2007 nil 436603 in respect of 2007 awards 2007 443070 and 411028 for 2006 awards 2007 421111
the charge recognised in the current year amounted to us2258000 2007 us1497000
deferred bonus share plan dbsp
executive directors and selected employees were originally eligible to participate in this scheme although the remuneration committee 
decided during 2007 that executive directors should no longer continue to participate participants may be invited to elect or in some 
cases be required to receive a proportion of any bonus in ordinary shares of the company “invested awards” following such an award 
the company will generally grant the participant an additional award of a number of shares bearing a specified ratio to the number of his or 
her invested shares “matching shares” the 2006 awards vest on the third anniversary of the grant date provided that the participant did 
not leave the group’s employment subject to a limited number of exceptions however a change in the rules of the dbsp scheme was 
approved by shareholders at the annual general meeting of the company on 11 may 2007 such that for the march 2007 share awards and 
for any awards made thereafter the invested and matching shares would unless the remuneration committee of the board of directors 
determined otherwise vest 3333 on the first anniversary of the date of grant a further 3333 on the second anniversary of the date of 
grant and the final 3334 of the award on the third anniversary of the date of grant 
105
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
22 sharebased payment plans continued
deferred bonus share plan dbsp continued
at the year end the values of the bonuses settled by shares cannot be determined until all employees have confirmed the voluntary portion 
of their bonus they wish to be settled by shares rather than cash and until the remuneration committee has approved the mandatory 
portion of the employee bonuses to be settled in shares once the voluntary and mandatory portions of the bonus to be settled in shares 
are determined the final bonus liability to be settled in shares is transferred to the reserve for sharebased payments the costs relating to 
the matching shares are recognised over the relevant vesting period and the fair values of the equitysettled matching shares granted to 
employees are based on the quoted closing market price at the date of grant adjusted for the trued up percentage vesting rate of the plan 
the details of the fair values and assumed vesting rates of the dbsp scheme are below
      weighted average trued up
      fair value per share vesting rate
2008 awards       522p 958
2007 awards       415p 912
2006 awards       353p 870
the following shows the movement in the number of shares held under the dbsp scheme outstanding but not exercisable
       2008 2007
       number number
outstanding at 1 january       2558711 1104503
granted during the period       1777080 1582166
vested during the period       385700 3204
forfeited during the period       194708 124754
outstanding at 31 december       3755383 2558711
 includes invested and matching shares
the number of awards still outstanding but not exercisable at 31 december 2008 is made up of 1688558 in respect of 2008 awards 
2007 nil 1084602 in respect of 2007 awards 2007 1500298 and 982223 for 2006 awards 2007 1058413
the charge recognised in the 2008 income statement in relation to matching share awards amounted to us5665000 2007 us3411000
share incentive plan sip
all uk employees including uk resident directors are eligible to participate in the scheme employees may invest up to sterling 1500 per 
tax year of gross salary or if lower 10 of salary to purchase ordinary shares in the company there is no holding period for these shares
restricted share plan rsp
under the restricted share plan scheme employees are granted shares in the company over a discretionary vesting period which may 
or may not be at the direction of the remuneration committee of the board of directors subject to the satisfaction of performance 
conditions at present there are no performance conditions applying to this scheme nor is there currently any intention to introduce them 
in the future the fair values of the awards granted under the plan at various grant dates during the year are based on the quoted market 
price at the date of grant adjusted for an assumed vesting rate over the relevant vesting period for details of the fair values and assumed 
vesting rate of the rsp scheme see below
      weighted average  trued up
      fair value per share vesting rate
2008 awards       478p 981
2007 awards       456p 1000
2006 awards       278p 963
the following shows the movement in the number of shares held under the rsp scheme outstanding but not exercisable
       2008 2007
       number number
outstanding at 1 january       394216 161101
granted during the period       811399 239567
vested during the period        5180 –
forfeited during the period       15724 6452
outstanding at 31 december       1184711 394216
the number of awards still outstanding but not exercisable at 31 december 2008 is made up of 795675 in respect of 2008 awards 
2007 nil 234387 in respect of 2007 awards 2007 239567 and 154649 for 2006 awards 2007 154649
during the year the company recognised a charge of us1525000 2007 us504000 in relation to the above
106
petrofac annual report 
and accounts 2008 the group has recognised a total charge of us9448000 2007 us5412000 in the income statement during the year relating to the 
above employee sharebased schemes see note 4f which has been transferred to the reserve for sharebased payments along with 
us9602000 of the bonus liability accrued for the year ended 31 december 2007 which has been voluntarily elected or obliged to be 
settled in shares granted during the year 2007 us6105000
for further details on the above employee sharebased payment schemes refer to pages 69 to 71 of the directors’ remuneration report
23 other reserves
    net unrealised 
    gainslosses on net unrealised
    availablefor losses foreign reserve for
    salefinancial gains on currency sharebased 
    assets derivatives translation payments total
    us’000 us’000 us’000 us’000 us’000
balance at 1 january 2007 as previously reported   738 9340 4889 4644 19611
restatement    – 19213 – – 19213
balance at 1 january 2007 as restated    738 28553 4889 4644 38824
foreign currency translation    – – 72 – 72
net gains on maturity of cash flow hedges recycled in the year  – 22183 – – 22183
net changes in fair value of derivatives and financial assets 
 designated as cash flow hedges as restated   – 59487 – – 59487
changes in fair value of availableforsale financial assets   140 – – – 140
sharebased payments charge note 22    – – – 5412 5412
transfer during the year note 22    – – – 6105 6105
balance at 1 january 2008 as restated    598 65857 4817 16161 87433
foreign currency translation    – – 84232 – 84232
net gains on maturity of cash flow hedges recycled in the year  – 32103 – – 32103
net changes in fair value of derivatives and financial assets 
 designated as cash flow hedges    – 25907 – – 25907
changes in fair value of availableforsale financial assets   879 – – – 879
impairment of availableforsale financial assets   355 – – – 355
sharebased payments charge note 22    – – – 9448 9448
transfer during the year note 22    – – – 9602 9602
shares vested during the year note 22    – – – 3009 3009
balance at 31 december 2008    74 7847 79415 32202 39292
 during 2008 the company has identified that in prior periods certain gains and losses on cash flow hedges have been recycled to accrued contract expenses from 
other reserves net unrealised lossesgains on derivatives ahead of the contract costs to which they relate impacting the income statement as a result 
us19213000 has been reclassified from contract costs to other reserves at 1 january 2007 and the net changes in fair value in 2007 adjusted by us17753000 
the impact on the income statement was immaterial so no adjustment has been made
nature and purpose of other reserves
net unrealised gainslosses on availableforsale financial assets
this reserve records fair value changes on availableforsale financial assets held by the group net of deferred tax effects realised gains 
and losses on the sale of availableforsale financial assets are recognised as other income or expenses in the income statement
net unrealised gainslosses on derivatives
the portion of gains or losses on cash flow hedging instruments that are determined to be effective hedges are included within this reserve 
net of related deferred tax effects when the hedged transaction occurs or is no longer forecast to occur the gain or loss is transferred out 
of equity to the income statement realised net gains amounting to us31713000 2007 us21475000 relating to foreign currency 
forward contracts and financial assets designated as cash flow hedges have been recognised in cost of sales realised net gains of 
us63000 2007 us708000 relating to interest rate derivatives have been classified as a net interest expense and a realised net gain of 
us327000 2007 nil was added to revenues in respect of oil derivatives 
the forward currency points element of derivative financial instruments relating to forward currency contracts amounting to a net loss of 
us11826000 2007 nil have been recognised in the cost of sales the time value portion gain on interest rate derivatives of us433000 
2007 nil and loss on oil derivatives of us145000 2007 nil were netted off and added to interest payable
foreign currency translation reserve
the foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements in 
foreign subsidiaries it is also used to record exchange differences arising on monetary items that form part of the group’s net investment 
in subsidiaries
107
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
23 other reserves continued
nature and purpose of other reserves continued
reserve for sharebased payments
the reserve for sharebased payments is used to record the value of equity settled sharebased payments awarded to employees and 
transfers out of this reserve are made upon vesting of the original share awards
the transfer during the year reflects the transfer from accrued expenses within trade and other payables of the bonus liability relating to the 
year ended 2007 of us9602000 2006 bonus of us6105000 which has been voluntarily elected or mandatorily obliged to be settled 
in shares during the year note 22 
24 interestbearing loans and borrowings
the group had the following interestbearing loans and borrowings outstanding
  31 december 2008 31 december 2007 effective  2008 2007
  actual interest rate actual interest rate interest rate maturity us’000 us’000
current
revolving credit facility i – us libor  us libor  – – 6500 
     0875   0875
shortterm loan ii – kd discount rate  kd discount rate  – – 3627 
    150   150
bank overdrafts iii uk libor uk libor uk libor on demand 45256 15666 
    0875   0875   0875  
  us libor us libor us libor 
   0875   0875   0875  
  kd discount rate kd discount rate kd discount rate 
    200   150   200
other loans
current portion of  
 term loan iv usuk libor usuk libor 418 to 488  9156 2662 
     0875   0875  2007 495  
     to 584
      54412 28455
noncurrent
revolving credit facility v usuk libor usuk libor 374 to 502 2013 18720 8953 
   0875   0875 2007 497 
    to 562
revolving credit facility i us libor us libor  311 2010 20000 – 
    0875  0875    
term loan  iv usuk libor usuk libor 418 to 488 20092013 54847 75019 
    0875   0875 2007 495  
    to 584   
      93567 83972
less
debt acquisition costs 
 net of accumulated 
 amortisation and effective  
 interest rate adjustments      5379 2332
      88188 81640
details of the group’s interestbearing loans and borrowings are as follows
i revolving credit facilities
this facility provided by the royal bank of scotlandhalifax bank of scotland rbshbos is repayable on 31 december 2010
ii shortterm loan
the shortterm loan is denominated in kuwaiti dinars kd and relates to funding provided for a project in kuwait the loan was settled 
during 2008 
108
petrofac annual report 
and accounts 2008 iii bank overdrafts
bank overdrafts are drawn down in us dollars kuwaiti dinars and sterling denominations to meet the group’s working capital 
requirements these are repayable on demand
iv term loan
the term loan with rbshbos at 31 december 2008 comprised drawings of us33998000 2007 us35310000 denominated in us 
and us30005000 2007 us42371000 denominated in sterling both elements of the loan are repayable over a period of five years 
commencing 31 december 2008 to 30 september 2013
v revolving credit facility
the drawings against this facility which is also provided by rbshbos will be converted to a term loan on 30 september 2010 to be 
repaid over a period of three years ending 30 september 2013 the drawings at 31 december 2008 comprised us13900000 2007 
us2400000 denominated in us and us4820000 2007 us6553000 denominated in sterling 
the group’s credit facilities and debt agreements contain covenants relating to cash flow cover cost of borrowings cover dividends and 
various other financial ratios with the exception of petrofac international ltd which under its existing bank covenants is restricted from 
making upstream cash payments in excess of 70 per cent of its net income in any one year none of the company’s subsidiaries is subject 
to any material restrictions on their ability to transfer funds in the form of cash dividends loans or advances to the company 
25 provisions
      other longterm
      employment  provision for 
      benefits provision decommissioning total
      us’000 us’000 us’000
at 1 january 2008      17218 1828 19046
additions during the year      10223 1546 11769
unused amounts reversedpaid in the year      1216 – 1216
unwinding of discount      – 64 64
at 31 december 2008      26225 3438 29663
other longterm employment benefits provision
labour laws in certain countries in which the group operates require employers to provide for other longterm employment benefits these 
benefits are payable to employees at the end of their period of employment the provision for these longterm benefits is calculated based 
on the employees’ last drawn salary at the balance sheet date and length of service subject to the completion of a minimum service period 
in accordance with the local labour laws of the jurisdictions in which the group operates the amount is payable to the employees on being 
transferred to another jurisdiction or on cessation of employment
provision for decommissioning
the decommissioning provision primarily relates to the company’s obligation for the removal of facilities and restoration of the site at the 
pm304 field in malaysia at chergui in tunisia and on the don assets in the united kingdom the liability is discounted at the rate of 350 
on pm304 2007 350 525 on chergui and 340 2007 nil on don the unwinding of the discount is classified as a finance cost 
note 5 the company estimates that the cash outflows against these provisions will arise in 2014 on pm304 in 2018 on chergui and in 
2013 on don assuming no further development of the asset
26 other financial liabilities
       2008 2007
       us’000 us’000
other financial liabilities – noncurrent
deferred consideration        32147 13622
fair value of derivative instruments note 31      – 130
other        118 118
        32265 13870
other financial liabilities – current
interest payable       118 812
fair value of derivative instruments note 31      6244 52
        6362 864
109
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
27 trade and other payables
       2008 2007
       us’000 us’000
trade payables       275058 187417
advances received from customers       76845 61744
accrued expenses       149684 136514
other taxes payable       6876 16885
other payables       4866 5457
        513329 408017
trade payables are noninterest bearing and are normally settled on terms of between 30 and 60 days
advances from customers represent payments received for contracts on which the related work had not been performed at the balance 
sheet date
included in other payables are retentions held against subcontractors of us911000 2007 us4292000
certain trade and other payables will be settled in currencies other than the reporting currency of the group mainly in sterling euros and 
kuwaiti dinars
28 accrued contract expenses
        as restated
       2008 2007
       us’000 us’000
accrued contract expenses       543191 379356
reserve for contract losses       8670 3226
        551861 382582
the reserve for contract losses is to cover costs in excess of revenues on certain contracts
29 commitments and contingencies
commitments
in the normal course of business the group will obtain surety bonds letters of credit and guarantees which are contractually required to 
secure performance advance payment or in lieu of retentions being withheld some of these facilities are secured by issue of corporate 
guarantees by the company in favour of the issuing banks 
at 31 december 2008 the group had letters of credit of us24096000 2007 us8184000 and outstanding letters of guarantee 
including performance and bid bonds of us865120000 2007 us663292000 against which the group had pledged or restricted 
cash balances of in aggregate us1506000 2007 us1351000 
at 31 december 2008 the group had outstanding forward exchange contracts amounting to us166412000 2007 us326442000 
these commitments consist of future obligations to either acquire or sell designated amounts of foreign currency at agreed rates and value 
dates note 31 
leases
the group has financial commitments in respect of noncancellable operating leases for office space and equipment these non
cancellable leases have remaining noncancellable lease terms of between one and seventeen years and for certain property leases are 
subject to renegotiation at various intervals as specified in the lease agreements the future minimum rental commitments under these 
noncancellable leases are as follows
       2008 2007
       us’000 us’000
within one year       59292 70870
after one year but not more than five years       72729 76493
more than five years       54787 52827
        186808 200190
included in the above are commitments relating to the lease of an office building extension in aberdeen united kingdom of 
us44573000 2007 us54933000 and the lease of a drilling rig for the don southwest project of us35744000 
2007 us43200000
minimum lease payments recognised as an operating lease expense during the year amounted to us26557000 2007 us21359000 
110
petrofac annual report 
and accounts 2008 capital commitments
at 31 december 2008 the group had capital commitments of us44035000 2007 us29630000 excluding the above lease 
commitments 
included in the above are commitments for the development of the don assets amounting to us8610000 2007 nil and commitments 
relating to the further appraisal and development of wells as part of the cendor project in malaysia amounting to us26468000  
2007 us11389000
30 related party transactions 
the consolidated financial statements include the financial statements of petrofac limited and the subsidiaries listed in note 32 petrofac 
limited is the ultimate parent entity of the group
the following table provides the total amount of transactions which have been entered into with related parties
     sales to related purchases from amounts owed amounts owed
     parties related parties by related parties to related parties
     us’000 us’000 us’000 us’000
joint ventures  2008    9081 1858 2907 367
  2007    180 507 3147 625
other directors’ interests 2008    – 1277 – 192
  2007    – 614 – 119
all sales to and purchases from joint ventures are made at normal market prices and the pricing policies and terms of these transactions 
are approved by the group’s management
all related party balances will be settled in cash
purchases in respect of other directors’ interests of us1277000 2007 us614000 reflect the market rate based costs of chartering the 
services of an aeroplane used for the transport of senior management and directors of the group on company business which is owned 
by an offshore trust of which the chief executive of the company is a beneficiary 
compensation of key management personnel 
the following details remuneration of key management personnel of the group comprising of executive and nonexecutive directors of the 
company and other senior personnel further information relating to the individual directors is provided in the directors’ remuneration 
report on pages 66 to 74
       2008 2007
       us’000 us’000
shortterm employee benefits       5542 5063
other longterm employment benefits        59 43
sharebased payments       1311 906
fees paid to nonexecutive directors       554 546
        7466 6558
31 risk management and financial instruments
risk management objectives and policies
the group’s principal financial assets and liabilities other than derivatives comprise trade and other receivables cash and shortterm 
deposits interestbearing loans and borrowings trade and other payables and deferred consideration
the group’s activities expose it to various financial risks particularly associated with interest rate risk on its variable rate loans and 
borrowings and foreign currency risk on both conducting business in currencies other than reporting currency as well as translation of the 
assets and liabilities of foreign operations to the reporting currency these risks are being addressed by using a combination of various 
derivative instruments principally interest rate swaps caps and forward currency contracts in line with the group’s hedging policy the 
group has a policy not to enter into speculative trading of financial derivatives
the board of directors of the company has established an audit committee and risk committee to help identify evaluate and manage the 
significant financial risks faced by the group and their activities are discussed in detail on pages 61 to 65 
the other main risks besides interest rate and foreign currency risk arising from the group’s financial instruments are credit risk liquidity risk 
and commodity price risk and the policies relating to these risks are discussed in detail below
111
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
31 risk management and financial instruments continued
interest rate risk 
interest rate risk arises from the possibility that changes in interest rates will affect the value of the group’s interestbearing financial 
liabilities and assets 
the group’s exposure to market risk arising from changes in interest rates relates primarily to the group’s longterm variable rate debt 
obligations and its cash and bank balances the group’s policy is to manage its interest cost using a mix of fixed and variable rate debt and 
specifically to keep between 60 and 80 of its term borrowings at fixed or capped rates of interest  at 31 december 2008 after taking 
into account the effect of interest rate swaps and collars approximately 651 2007 691 of the group’s term borrowings are at a fixed 
or capped rate of interest
interest rate sensitivity analysis
the impact on the group’s pretax profit and equity due to a reasonably possible change in interest rates is demonstrated in the table 
below the analysis assumes that all other variables remain constant
   pretax profit equity
    
     100 basis  100 basis  100 basis 100 basis
     point increase point decrease point increase point decrease
     us’000 us’000 us’000 us’000
31 december 2008     882 882 705 1615
31 december 2007     1058 1058 272 670
the following table reflects the maturity profile of these financial liabilities and assets 
year ended 31 december 2008
  within 1 – 2 2 – 3 3 – 4 4 – 5 more than
  1 year years years years years 5 years total
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
floating rates
revolving credit facilities note 24  – 20936 4212 6552 7020 – 38720
bank overdrafts note 24  45256 – – – – – 45256
term loan note 24  9156 11250 15625 18750 9222 – 64003
interest rate collars note 31  1137 – – – – – 1137
interest rate swap note 31  37 – – – – – 37
   55586 32186 19837 25302 16242 – 149153
financial assets
floating rates
cash and shortterm deposits note 19  694415 – – – – – 694415
restricted cash balances note 15  2736 207 – – – 1692 4635
   697151 207 – – – 1692 699050
year ended 31 december 2007
  within 1 – 2 2 – 3 3 – 4 4 – 5 more than
  1 year years years years years 5 years total
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
floating rates
revolving credit facilities note 24  6500 – 448 2015 3134 3356 15453
shortterm loan note 24  3627 – – – – – 3627
bank overdrafts note 24  15666 – – – – – 15666
term loan note 24  2662 10000 11250 15625 18750 19394 77681
interest rate collars note 31  – 130 – – – – 130
   28455 10130 11698 17640 21884 22750 112557
financial assets
floating rates
cash and shortterm deposits note 19  581552 – – – – – 581552
restricted cash balances note 15  1351 – – – – – 1351
interest rate swap note 31  – 28 – – – – 28
   582903 28 – – – – 582931
financial liabilities in the above table are disclosed gross of debt acquisition costs and effective rate adjustments of us5379000 2007 
us2332000
112
petrofac annual report 
and accounts 2008 interest on financial instruments classified as floating rate is repriced at intervals of less than one year the other financial instruments of the 
group that are not included in the above tables are noninterest bearing and are therefore not subject to interest rate risk 
derivative instruments designated as cash flow hedges 
at 31 december 2008 the group held the following derivative instruments designated as cash flow hedges in relation to floating rate 
interestbearing loans and borrowings
    fair value of assetliability
    
 nominal amount  date 2008 2007
instrument us equivalent period to maturity commenced us’000 us’000
uk libor interest rate swap us2629000 9 months 31 december 2004 37 28
uk libor interest rate collar us30131000 1 year 31 december 2007 705 74
us libor interest rate collar us34138000 1 year 31 december 2007 432 56
during 2008 changes in fair value of a loss of us1607000 2007 us102000 relating to these derivative instruments were taken to 
equity and a gain of us63000 2007 us708000 were recycled from equity into interest expense in the income statement the time 
value portion of these derivatives of a gain of us433000 2007 nil was nettedoff against interest expense
foreign currency risk
the group is exposed to foreign currency risk on sales purchases and translation of assets and liabilities that are in a currency other than 
the functional currency of its operating units the group is also exposed to the translation of the functional currencies of its units to the us 
dollar reporting currency of the group the following table summarises the percentage of foreign currency denominated revenues costs 
financial assets and financial liabilities expressed in us dollar terms of the group totals 
      2008 2007
      of foreign currency   of foreign currency 
     denominated items  denominated items 
revenues      438 486
costs      616 687
current financial assets      579 679
noncurrent financial assets      00 06
current financial liabilities      648 458
noncurrent financial liabilities      256 440
the group uses forward currency contracts to manage the currency exposure on transactions significant to its operations it is the group’s 
policy not to enter into forward contracts until a highly probable forecast transaction is in place and to negotiate the terms of the derivative 
instruments used for hedging to match the terms of the hedged item to maximise hedge effectiveness 
foreign currency sensitivity analysis
the income statements of foreign operations are translated into the reporting currency using a weighted average rate of conversion 
foreign currency monetary items are translated using the closing rate at the date of the balance sheet revenues and costs in currencies 
other than the functional currency of an operating unit are recorded at the prevailing rate at the date of the transaction the following 
significant exchange rates applied during the year in relation to us dollars
   2008 2007
    
     average rate closing rate average rate closing rate
sterling     185 146 201 199
kuwaiti dinars     372 362 351 366
euros     148 139 138 146
113
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
31 risk management and financial instruments continued
foreign currency sensitivity analysis continued
the following table summarises the impact on the group’s pretax profit and equity due to change in the fair value of monetary assets 
liabilities and derivative instruments of a reasonably possible change in us dollar exchange rates with respect to different currencies
   pretax profit equity
    
      10 us dollar  –5 us dollar  10 us dollar  –5 us dollar 
     rate increase  rate decrease   rate increase   rate decrease 
     us’000 us’000 us’000 us’000
31 december 2008     16355 8177 10597 6135
31 december 2007     27285 13642 35065 17532
derivative instruments designated as cash flow hedges 
at 31 december 2008 the group had foreign exchange forward contracts designated as cash flow hedges with a fair value gain of 
us10165000 2007 us28657000 in equity as follows 
  contract value fair value net unrealised gainloss 
    
   2008 2007 2008 2007 2008 2007
   us’000 us’000 us’000 us’000 us’000 us’000
euro currency sales purchases    41655 321264 31783 349964 9488 28700
sterling currency purchases   26747 4500 19621 4448 2956 52
yen currency purchases   7465 678 8716 687 – 9
kuwaiti dinars sales    90545 – 86912 – 3633 –
        10165 28657
the above foreign exchange contracts mature and will affect income between january 2009 and april 2010 2007 between january 2008 
and february 2009
at 31 december 2008 the group had cash and shortterm deposits designated as cash flow hedges with a fair value loss of us2205000 
2007 gain us36966000 as follows 
   fair value  net unrealised gainloss 
    
     2008 2007 2008 2007
     us’000 us’000 us’000 us’000
euro currency cash and shortterm deposits     269409 235479 2653 35143
sterling currency cash and shortterm deposits    15667 16697 4858 1823
        2205 36966
during 2008 changes in fair value of us25950000 2007 us59253000 relating to these derivative instruments and financial assets 
were taken to equity and us31713000 2007 us21475000 were recycled from equity into cost of sales in the income statement the 
forward points and ineffective portion of the above foreign exchange forward contracts of a loss of us11826000 2007nil was 
recognised in the income statement note 4b and 4d
commodity price risk – oil prices
the group is exposed to the impact of changes in oil  gas prices on its revenues and profits generated from sales of crude oil  gas the 
group did not hedge this risk related to the sale of gas production from its chergui investment which started production from august 2008 
as in accordance with the group policy hedging of production should only take place after obtaining sufficiently reliable and regular 
longterm forecasted production data 
during the year the group used a zero premium oil price collar to hedge its exposure to fluctuations in oil prices which matured on a 
monthly basis from 31 january 2008 to 31 december 2008 the collar hedged 240000 barrels of oil production and during the year a gain 
of us327000 was recognised in the income statement on the maturity of the contract
on 30 september 2008 the group entered into an oil price collar with a premium payable of us87000 maturing on a monthly basis from 
1 january 2009 to 30 june 2009 which hedges 60000 barrels of oil the fair value of this oil price collar at 31 december 2008 was 
us1349000 with a gain recognised in equity of us1494000 being its intrinsic value and an interest expense recognised in the year of 
us145000 on its time value portion
114
petrofac annual report 
and accounts 2008 the following table summarises the impact on the group’s pretax profit and equity due to a change in the fair value of oil derivative 
instruments and the underlifting assetoverlifting liability of a reasonably possible change in the oil price
   pretax profit equity
    
     10 usbbl  –10 usbbl  10 usbbl  –10 usbbl 
     increase  decrease  increase  decrease 
     us’000 us’000 us’000 us’000
31 december 2008     – – 251 250
31 december 2007     446 446 1739 741
credit risk
the group trades only with recognised creditworthy third parties divisional risk review committees drrc have been set up by the 
board of directors to evaluate the creditworthiness of each individual third party at the time of entering into new contracts limits have 
been placed on the approval authority of the drrc above which the approval of the board of directors of the company is required 
receivable balances are monitored on an ongoing basis with appropriate followup action taken where necessary  at 31 december 2008 
the group’s five largest customers accounted for 507 of outstanding trade receivables and work in progress 2007 580
with respect to credit risk arising from the other financial assets of the group which comprise cash and cash equivalents availableforsale 
financial assets and certain derivative instruments the group’s exposure to credit risk arises from default of the counterparty with a 
maximum exposure equal to the carrying amount of these instruments
liquidity risk
the group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts revolving credit 
facilities project finance and term loans to reduce its exposure to liquidity risk the maturity profiles of the group’s financial liabilities at 31 
december 2008 are as follows 
year ended 31 december 2008
       contractual 
  6 months 612 12 25 more than undiscounted carrying
  or less months years years 5 years cash flows amount
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
interestbearing loans and borrowings  49835 4577 31235 62332 – 147979 142600
trade and other payables 
 excluding advances from customers  380145 56339 – – – 436484 436484
due to related parties  469 90 – – – 559 559
deferred consideration  – – 29454 8894 – 38348 32147
derivative instruments  5436 808 – – – 6244 6244
interest payable  118 – – – – 118 118
interest payments  1817 1817 2799 4236 – 10669 –
   437820 63631 63488 75462 – 640401 618152
year ended 31 december 2007
       contractual 
  6 months 612 12 25 more than undiscounted carrying
  or less months years years 5 years cash flows amount
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
interestbearing loans and borrowings  19293 9162 10000 51222 22750 112427 110095
trade and other payables 
 excluding advances from customers  345833 440 – – – 346273 346273
due to related parties  744 – – – – 744 744
deferred consideration  1964 2088 9570 – – 13622 13622
derivative instruments  52 – 130 – – 182 182
interest payable  812 – – – – 812 812
interest payments  2481 2480 3900 10163 1492 20516 –
   371179 14170 23600 61385 24242 494576 471728
the group uses various funded facilities provided by banks and its own financial assets to fund the above mentioned financial liabilities
115
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
31 risk management and financial instruments continued
capital management
the group’s policy is to maintain a healthy capital base to sustain future growth and maximise shareholder value 
the group seeks to optimise shareholder returns by maintaining a balance between debt and capital and monitors the efficiency of its 
capital structure on a regular basis the gearing ratio and return on shareholders’ equity is as follows
        as restated
       2008 2007
       us’000 us’000
cash and shortterm deposits        694415 581552
interestbearing loans and borrowings a       142600 110095
net cash b       551815 471457
equity attributable to petrofac limited shareholders c      558822 522761
profit for the year attributable to petrofac limited shareholders d     264989 188716
gross gearing ratio ac       255 211
net gearing ratio bc       net cash net cash
        position position
shareholders’ return on investment dc       474 361
fair values of financial assets and liabilities
the fair value of the group’s financial instruments and their carrying amounts included within the group’s balance sheet are set out below 
   carrying amount fair value
    
     2008 2007 2008 2007
      us’000 us’000 us’000 us’000
financial assets
cash and shortterm deposits     694415 581552 694415 581552
restricted cash     4635 1351 4635 1351
availableforsale financial assets     566 1586 566 1586
oil derivative     1349 336 1349 336
interest rate swap     – 28 – 28
forward currency contracts     11509 28709 11509 28709
financial liabilities
interestbearing loans and borrowings     142600 110095 142600 110095
deferred consideration     32147 13622 32147 13622
interest rate collars     1137 130 1137 130
interest rate swap     37 – 37 –
forward currency contractsdesignated as cash flow hedge   900 52 900 52
forward currency contractsundesignated     4170 – 4170 –
market values have been used to determine the fair values of availableforsale financial assets and forward currency contracts the fair 
values of interest rate swaps and collars have been calculated by discounting the expected future cash flows at prevailing interest rates 
the fair values of longterm interestbearing loans and borrowings are their amortised costs determined as the present value of discounted 
future cash flows using the effective interest rate the company considers that the carrying amounts of trade and other receivables trade 
and other payables other current and noncurrent financial assets and liabilities approximate their fair values and are therefore excluded 
from the above table
116
petrofac annual report 
and accounts 2008 32 subsidiaries and joint ventures
at 31 december 2008 the group had investments in the following subsidiaries and incorporated joint ventures
    proportion of nominal
    value of issued shares
    controlled by the group
    
name of company country of incorporation 2008 2007
trading subsidiaries
petrofac inc usa 100 100
petrofac international ltd jersey 100 100
petrofac energy developments limited england 100 100
petrofac energy developments international limited  jersey 100 100
petrofac uk holdings limited england 100 100
petrofac facilities management international limited jersey 100 100
petrofac services limited england 100 100
petrofac services inc usa 100 100
petrofac training international limited jersey 100 100
petroleum facilities e  c limited jersey 100 100
petrofac employee benefit trust jersey 100 100
atlantic resourcing limited scotland 100 100
petrofac algeria eurl algeria 100 100
petrofac engineering india private limited india 100 100
petrofac engineering services india private limited india 100 100
petrofac engineering limited england 100 100
petrofac offshore management limited jersey 100 100
petrofac fze united arab emirates 100 100
petrofac facilities management group limited scotland 100 100
petrofac facilities management limited scotland 100 100
petrofac international nigeria ltd nigeria 100 100
petrofac pars pjsc  iran 100 100
petrofac iran pjsc  iran 100 100
plant asset management limited scotland 100 100
petrofac nuigini limited papua new guinea 100 100
pfmap sendirian berhad malaysia 100 100
petrofac caspian limited azerbaijan 100 100
petrofac malaysiapm304 limited england 100 100
petrofac training group limited scotland 100 100
petrofac training holdings limited scotland 100 100
petrofac training limited scotland 100 100
petrofac training inc usa 100 100
petrofac training trinidad limited trinidad 100 100
monsoon shipmanagement limited jersey 100 100
petrofac ec international limited united arab emirates 100 100
petrofac saudi arabia limited saudi arabia 100 100
petrofac energy developments ohanet jersey limited jersey 100 100
petrofac energy developments ohanet llc usa 100 100
pedl limited england 100 100
petrofac cyprus limited cyprus 100 100
pkt technical services ltd russia 50 50
pkt training services ltd russia 100 100
pt pci indonesia indonesia 80 80
process control and instrumentation services pte ltd singapore 100 100
process control and instrumentation sendirian berhad malaysia 100 100
sakhalin technical training centre russia 80 80
petrofac norge as norway 100 100
 directly held by petrofac limited 
companies consolidated as subsidiaries on the basis of control
117
petrofac annual report 
and accounts 2008
financial statements
notes to the consolidated 
financial statements notes to the consolidated financial statements continued
at 31 december 2008
32 subsidiaries and joint ventures continued
    proportion of nominal
    value of issued shares
    controlled by the group
    
name of company country of incorporation 2008 2007
trading subsidiaries continued
spd group limited british virgin islands 51 51
spd uk limited scotland  51 51
spd fzco united arab emirates 51 51
spd llc united arab emirates 25 25
petrofac energy developments oceania limited cayman islands 100 100
petrofac kazakhstan limited formerly petrofac russia limited england 100 100
petrofac international uae llc united arab emirates 100 na
petrofac ec oman llc oman 100 na
petrofac international south africa pty limited south africa 100 na
eclipse petroleum technology limited england 100 na
caltec limited england 100 na
iperform limited scotland 100 na
joint ventures
costain petrofac limited england 50 50
kyrgyz petroleum company kyrgyz republic 50 50
mjvi sendirian berhad brunei 50 50
spie capag – petrofac international limited jersey 50 50
tte petrofac limited jersey 50 50
dormant subsidiaries
asjv venezuela sa venezuela 100 100
joint venture international limited scotland 100 100
montrose park hotels limited scotland 100 100
rgit ethos health  safety limited scotland 100 100
scota limited scotland 100 100
monsoon shipmanagement limited  cyprus 100 100
rubicon response limited scotland 100 100
companies consolidated as subsidiaries on the basis of control
118
petrofac annual report 
and accounts 2008 independent auditors’ report
to the members of petrofac limited
we have audited the parent company financial statements of 
petrofac limited ‘the company’ for the year ended 31 december 
2008 which comprise the income statement the balance sheet the 
cash flow statement the statement of changes in equity and the 
related notes 1 to 18 these parent company financial statements 
have been prepared under the accounting policies set out therein 
we have also audited the information in the directors’ remuneration 
report that is described as having been audited 
we have reported separately on the group financial statements of 
petrofac limited for the year ended 31 december 2008
this report is made solely to the company’s members as a body 
in accordance with article 110 of the companies jersey law 1991 
and the terms of our letter of engagement our audit work has 
been undertaken so that we might state to the company’s 
members those matters we are required to state to them in an 
auditor’s report and for no other purpose to the fullest extent 
permitted by law we do not accept or assume responsibility to 
anyone other than the company and the company’s members as 
a body for our audit work for this report or for the opinions we 
have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report  
and the parent company financial statements in accordance  
with applicable jersey law and international financial  
reporting standards are set out in the statement of directors’ 
responsibilities the directors are also responsible for the 
preparation of the directors’ remuneration report which they  
have chosen to prepare
our responsibility is to audit the parent company financial 
statements in accordance with relevant legal and regulatory 
requirements and international standards on auditing uk and 
ireland the company has also instructed us to audit the section 
of the directors’ remuneration report that has been described 
as audited
we report to you our opinion as to whether the parent company 
financial statements give a true and fair view and are properly 
prepared in accordance with the companies jersey law 1991 
we also report to you our opinion as to whether the section of  
the directors’ remuneration report of the company that has  
been described as audited has been properly prepared in all 
material respects in accordance with the basis of preparation 
described therein 
in addition we report to you if in our opinion the company has not 
kept proper accounting records or if we have not received all the 
information and explanations we require for our audit
we read other information contained in the annual report and 
consider whether it is consistent with the audited parent company 
financial statements the other information comprises only the 
chairman’s statement the group chief executive’s review the 
operating and financial review the corporate social responsibility 
report the directors’ information the corporate governance 
report the unaudited section of the directors’ remuneration 
report the shareholder information and the oil  gas reserves 
unaudited we consider the implications for our report if we 
become aware of any apparent misstatements or material 
inconsistencies with the parent company financial statements 
our responsibilities do not extend to any other information
basis of audit opinion
we conducted our audit in accordance with international standards 
on auditing uk and ireland issued by the auditing practices 
board an audit includes examination on a test basis of evidence 
relevant to the amounts and disclosures in the parent company 
financial statements and the section of the directors’ remuneration 
report that has been described as audited it also includes an 
assessment of the significant estimates and judgments made by 
the directors in the preparation of the parent company financial 
statements and of whether the accounting policies are appropriate 
to the company’s circumstances consistently applied and 
adequately disclosed
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary in 
order to provide us with sufficient evidence to give reasonable 
assurance that the parent company financial statements and the 
section of the directors’ remuneration report that has been 
described as audited are free from material misstatement whether 
caused by fraud or other irregularity or error in forming our opinion 
we also evaluated the overall adequacy of the presentation of 
information in the parent company financial statements and the 
section of the directors’ remuneration report that has been 
described as audited
opinion
in our opinion
 the parent company financial statements give a true and fair view 
■ ■
in accordance with international financial reporting standards of 
the state of the company’s affairs as at 31 december 2008 and of 
its profit for the year then ended
 the parent company financial statements have been properly 
■ ■
prepared in accordance with the companies jersey law 1991 
and
 the section of the directors’ remuneration report that has  
■ ■
been described as audited has been properly prepared in all 
material respects in accordance with the basis of preparation 
as described therein
ernst  young llp
london
6 march 2009
119
petrofac annual report 
and accounts 2008
financial statements
independent auditors’ report company income statement
for the year ended 31 december 2008
       2008 2007
      notes us’000 us’000
revenue      3 98540 71529
selling general and administration expenses     4 7839 6384
other expenses       438 1464
profit before tax and finance incomecosts      90263 63681
finance costs      5 6504 5329
finance income      5 8168 3089
profit before tax       91927 61441
income tax expense       6 68 147
profit for the year       91859 61294
the attached notes 1 to 18 form part of these company financial statements
120
petrofac annual report 
and accounts 2008 company balance sheet
at 31 december 2008
       2008 2007
      notes us’000 us’000
assets
noncurrent assets
property plant and equipment       41 52
investment in subsidiaries      8 214088 172057
longterm loan receivable from a subsidiary     9 219491 34541
        433620 206650
current assets
trade and other receivables        249 289
amounts due from subsidiaries      10 19937 19506
cash and shortterm deposits      11 14516 8406
        34702 28201
total assets       468322 234851
equity and liabilities
equity attributable to petrofac limited shareholders
share capital      17 8636 8636
share premium       68203 68203
capital redemption reserve       10881 10881
treasury shares      12 69333 29842
sharebased payments reserve      13 32202 16161
net unrealised losses on derivatives      15 425 56
retained earnings      18 61577 34418
total equity       111741 108401
noncurrent liabilities
interestbearing loans and borrowings       14 65464 42074
longterm employee benefit provisions       144 93
other financial liabilities       118 174
        65726 42341
current liabilities
trade and other payables       492 586
amounts due to subsidiaries      10 284930 75757
interestbearing loans and borrowings      14 5000 7750
other financial liabilities       433 16
        290855 84109
total liabilities       356581 126450
total equity and liabilities       468322 234851
the financial statements on pages 120 to 131 were approved by the board of directors on 6 march 2009 and signed on its behalf by keith 
roberts – chief financial officer
the attached notes 1 to 18 form part of these company financial statements
121
petrofac annual report 
and accounts 2008
financial statements
company balance sheet company cash flow statement
for the year ended 31 december 2008
       2008 2007
      notes us’000 us’000
operating activities
profit before tax        91927 61441
adjustments for
 depreciation      4 42 51
 sharebased payments      13 588 330
 difference between other longterm employment benefits paid  
  and amounts recognised in the income statement      51 31
 net finance cost income      5 1644 2240
 other noncash items net       3439 680
operating profit before working capital changes      87525 64773
trade and other receivables       40 35
amounts due from subsidiaries       92290 68965
trade and other payables       94 2624
amounts due to subsidiaries       210593 19804
current financial liabilities       417 7
        206191 13030
other noncurrent items net       425 73
cash generated from operations       205766 13103
interest paid       9228 4532
income taxes paid net       68 147
net cash flows from operating activities       196470 8424
investing activities
dividends received from subsidiaries       98243 70613
purchase of property plant and equipment       31 23
investment in subsidiaries       23569 2728
longterm loan made to a subsidiary       183579 34541
interest received       1523 2811
net cash flows used in from investing activities      107413 41588
financing activities
proceeds from interestbearing loans and borrowings      25000 –
repayment of interestbearing loans and borrowings      1312 –
shareholders loan note transactions       – 216
treasury shares purchased      12 42500 21698
equity dividends paid       64135 39479
net cash flows used in financing activities      82947 60961
net increase decrease in cash and cash equivalents      6110 10949
cash and cash equivalents at 1 january       8406 19355
cash and cash equivalents at 31 december     11 14516 8406
the attached notes 1 to 18 form part of these company financial statements
122
petrofac annual report 
and accounts 2008 company statement of changes in equity
for the year ended 31 december 2008
 attributable to shareholders of petrofac limited
 
      net unrealised
 issued  capital  sharebased gains
 share share  redemption treasury payments  losses on retained total
 capital premium reserve shares reserve derivatives earnings equity
 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
 note 17   note 12 note 13  note 18
balance at 1 january 2007 8629 66210 10881 8144 4644 487 11898 94605
net gain on maturity of cash flow 
 hedges recognised in 
 income statement – – – – – 532 – 532
net changes in fair value of 
 derivatives  – – – – – 11 – 11
total income and expenses  
 for the year recognised 
 in equity – – – – – 543 – 543
net profit for the year – – – – – – 61294 61294
total income and expenses  
 for the year – – – – – 543 61294 60751
sharebased payments charge  
 note13 – – – – 330 – – 330
shares issued on acquisition  7 1993 – – – – – 2000
treasury shares purchased  
 note 12 – – – 21698 – – – 21698
transfer to reserve for sharebased 
 payments note 13 – – – – 11187 – – 11187
dividends note 7 – – – – – – 38774 38774
balance at 1 january 2008 8636 68203 10881 29842 16161 56 34418 108401
net gains on maturity of 
 cash flow hedges recycled 
 in the year – – – – – 7 – 7
net changes in fair value of  
 derivatives  – – – – – 376 – 376
total income and expenses  
 for the year recognised 
 in equity – – – – – 369 – 369
net profit for the year – – – – – – 91859 91859
total income and expenses  
 for the year – – – – – 369 91859 91490
sharebased payments charge  
 note 13 – – – – 588 – – 588
shares vestedforfeited during  
 the year – – – 3009 3009 – – –
treasury shares purchased 
 note 12 – – – 42500 – – – 42500
transfer to reserve for sharebased  
 payments note 13 – – – – 18462 – – 18462
dividends note 7 – – – – – – 64700 64700
balance at 31 december 2008 8636 68203 10881 69333 32202 425 61577 111741
the attached notes 1 to 18 form part of these company financial statements
123
petrofac annual report 
and accounts 2008
financial statements
company statement 
of changes in equity notes to the company financial statements
at 31 december 2008
1 corporate information 
the consolidated financial statements of petrofac limited the 
company and petrofac employee benefit trust together referred 
to as the company financial statements for the year ended 
31 december 2008 were authorised for issue in accordance with 
a resolution of the directors on 6 march 2009 
petrofac limited is a limited liability company registered in jersey 
under the companies jersey law 1991 and is the holding 
company for the international group of petrofac subsidiaries 
together “the group” the group’s principal activity is the  
provision of facilities solutions to the oil  gas production and 
processing industry
2 summary of significant accounting policies
basis of preparation
the separate financial statements have been prepared on a 
historical cost basis except for derivative financial instruments that 
have been measured at fair value the presentation currency of the 
separate financial statements is united states dollars and all values 
in the separate financial statements are rounded to the nearest 
thousand us’000 except where otherwise stated 
statement of compliance
the separate financial statements have been prepared in 
accordance with international financial reporting standards ifrs 
and applicable requirements of jersey law 
investments in subsidiaries
investments in subsidiaries are stated at cost less any provision  
for impairment
longterm loan receivables from subsidiaries
longterm loan receivables from subsidiaries are initially stated at 
fair value after initial recognition they are subsequently measured 
at amortised cost using the effective interest rate method
due fromdue to subsidiaries
due fromdue to subsidiaries are both interest bearing and 
noninterest bearing short term funding to and from subsidiaries 
these are recognised at the fair value of consideration received
paid less any provision for impairment 
cash and cash equivalents
cash and cash equivalents consist of cash at bank and in hand 
and shortterm deposits with an original maturity of three months or 
less for the purpose of the cash flow statement cash and cash 
equivalents consist of cash and cash equivalents as defined above 
net of any outstanding bank overdrafts
interestbearing loans and borrowings
all interestbearing loans and borrowings are initially recognised at 
the fair value of the consideration received net of issue costs 
directly attributable to the borrowing
after initial recognition interestbearing loans and borrowings are 
subsequently measured at amortised cost using the effective 
interest rate method amortised cost is calculated by taking  
into account any issue costs and any discount or premium  
on settlement
sharebased payment transactions
the company operates a number of share award schemes on 
behalf of the employees of the group which are described in detail 
in note 22 of the consolidated financial statements of the group 
the reserve for sharebased payments is used to record the value 
of equity settled sharebased payments awarded to employees and 
transfers out of this reserve are made upon vesting of the original 
share awards the sharebased payments charge pertaining to 
fellow group companies employees are reimbursed by them to  
the company
longterm employee benefit provisions
labour laws in certain countries in which the company operates 
require employers to provide for other longterm employment 
benefits these benefits are payable to employees at the end of 
their period of employment the provision for these longterm 
benefits is calculated based on the employees’ last drawn salary 
at the balance sheet date and length of service subject to the 
completion of a minimum service period in accordance with the 
local labour laws of the jurisdictions in which the company operates 
revenues
revenues comprise of dividends from subsidiaries which are 
recognised when the right to receive payment is established
124
petrofac annual report 
and accounts 2008 3 revenues
       2008 2007
       us’000 us’000
dividend income from subsidiaries       98540 71529
4 selling general and administration expenses
       2008 2007
       us’000 us’000
staff costs       5170 4313
depreciation       42 51
other operating expenses       2627 2020
        7839 6384
included in other operating expenses above are auditors’ remuneration of us68000 2007 us54000 related to the fee for the audit of 
the parent company financial statements it excludes fees in relation to the audit of the group financial statements which are borne by 
petrofac services limited
5 finance costsincome
       2008 2007
       us’000 us’000
interest payable
longterm borrowings       1356 2438
on amounts due to subsidiaries       5141 2891
expense of time value portion of derivative financial instrument      7 –
total finance cost       6504 5329
interest receivable
bank interest receivable       525 1630
on amounts due from subsidiaries       7643 1455
other interest receivable       – 4
total finance income       8168 3089
6 income tax
       2008 2007
       us’000 us’000
current income tax  
withholding tax on loan interest income from subsidiaries      68 147
the income tax expense arises due to irrecoverable withholding tax deducted on payments to the company as explained in detail in note 
6 of the consolidated financial statements of the group the company has no income tax expense in jersey in addition as any deferred tax 
on temporary differences would be recognised at a 0 tax rate there are no deferred tax assets or liabilities for the company 
7 dividends paid
       2008 2007
       us’000 us’000
declared and paid during the year
equity dividends on ordinary shares
final dividend for 2006 643 cents per share      – 22018
interim dividend 2007 490 cents per share      – 16756
final dividend for 2007 1150 cents per share      39164 –
interim dividend 2008 750 cents per share      25536 –
        64700 38774
  
       2008 2007
       us’000 us’000
proposed for approval at agm not recognised as a liability as at 31 december
equity dividends on ordinary shares
final dividend for 2008 1790 cents per share 2007 1150 cents per share     61831 39725
125
petrofac annual report 
and accounts 2008
financial statements
notes to the company 
financial statements notes to the company financial statements continued
at 31 december 2008
8 investments in subsidiaries
        us’000
at 1 january 2008        172057
investment in petrofac uk holdings limited        42031
as at 31 december 2008        214088
the investment in petrofac uk holdings limited comprises additional loans made for the purpose of acquiring the share capital of eclipse 
petroleum technology limited and caltec limited as explained in detail in note 10 of the group consolidated financial statements
 
at 31 december 2008 the company had investments in the following subsidiaries
    proportion of nominal
    value of issued shares
    controlled by the company
    
name of company country of incorporation 2008 2007
trading subsidiaries
petrofac inc usa 100 100
petrofac international ltd jersey 100 100
petrofac energy developments limited england 100 100
petrofac energy developments international limited  jersey 100 100
petrofac uk holdings limited england 100 100
petrofac facilities management international limited jersey 100 100
petrofac services limited england 100 100
petrofac services inc usa 100 100
petrofac training international limited jersey 100 100
petroleum facilities e  c limited jersey 100 100
9 longterm loan receivable from a subsidiary
longterm loan receivable from a subsidiary represents a loan made to one of the company’s subsidiaries petrofac energy developments 
international limited for the purpose of its appraisal of and development activities on its oil  gas assets the loan carries an interest rate 
of us libor  20 margin 
10 amounts due fromdue to subsidiaries
amounts due fromdue to subsidiaries comprise both interest and noninterest bearing short term loans provided toreceived from 
subsidiaries listed in note 8 above
11 cash and shortterm deposits
       2008 2007
       us’000 us’000
cash at bank and in hand       2284 2104
shortterm deposits       12232 6302
total cash and bank balances cash and cash equivalents     14516 8406
cash at bank earns interest at floating rates based on daily bank deposit rates shortterm deposits are made for varying periods of 
between one day and one month depending on the immediate cash requirements of the group and earn interest at respective shortterm 
deposit rates the fair value of cash and bank balances is us14516000 2007 us8406000
12 treasury shares
for the purpose of making awards under its employee share schemes the company acquires its own shares which are held by the 
petrofac employee benefit trust all these shares have been classified in the balance sheet as treasury shares within equity
the movements in total treasury shares are shown below
   2008 2007
    
     number us’000 number us’000
at 1 january     4052024 29842 1500135 8144
acquired during the year     5854194 42500 2551889 21698
vestedforfeited during the year     365912 3009 – –
at 31 december     9540306 69333 4052024 29842
126
petrofac annual report 
and accounts 2008 as at 31 december 2008 5504819 of the above shares were held by lehman brothers in a client custody account which is now  
being managed by their appointed administrator the company is currently in discussion with the administrator to procure the release  
of these shares
included in the above treasury shares are 274938 shares held in relation to the acquisition of spd group limited in 2007 see note 10 
of consolidated financial statements
13 sharebased payments reserve 
sharebased payment plan information is disclosed in note 22 of the consolidated financial statements of the group 
during the year a sharebased payment scheme charge of us588000 2007 us330000 was recognised by the company in respect 
of its own employees’ time spent on shareholder related services
the transfer during the year into sharebased payment reserve disclosed in the statement of changes in equity of us18462000 2007 
us11187000 represents amounts collected from subsidiaries in respect of their employees share based payment transactions
14 interestbearing loans and borrowings
the company had the following interestbearing loans and borrowings outstanding
  31 december 2008 31 december 2007 effective  2008 2007
  actual interest rate actual interest rate interest rate maturity us’000 us’000
current
revolving credit facility  – us libor  us libor  – – 6500 
     0875   0875
current portion of term i us libor us libor  418  – 5000 1250 
 loan    0875  0875  2007 495
      5000 7750
noncurrent
revolving credit facility ii usuk libor usuk libor 374 to 502 2013 18720 8953 
   0875   0875 2007 497 to  
    562
revolving credit facility iii us libor us libor  311 2010 20000 – 
    0875  0875
term loan  i us libor us libor 418  20092013 28998 34060 
    0875   0875 2007 495    
      67718 43013
less
debt acquisition costs 
 net of accumulated 
 amortisation and effective  
 interest rate adjustments      2254 939
      65464 42074
details of the company’s interestbearing loans and borrowings are as follows
i term loan
the term loan with rbshbos at 31 december 2008 comprised drawings of us33998000 2007 us35310000 repayable over a 
period of five years commencing 31 december 2008 to 30 september 2013
ii revolving credit facility
the drawings against this facility which is also provided by rbshbos will be converted to a term loan on 30 september 2010 to be 
repaid over a period of three years ending 30 september 2013 
iii revolving credit facilities
this facility provided by the royal bank of scotlandhalifax bank of scotland rbshbos is repayable on 31 december 2010
127
petrofac annual report 
and accounts 2008
financial statements
notes to the company 
financial statements notes to the company financial statements continued
at 31 december 2008
15 risk management and financial instruments
risk management objectives and policies
the company’s principal financial assets and liabilities other than derivatives are amounts due from and due to subsidiaries cash and 
shortterm deposits and interest bearing loans and borrowings
the company’s activities expose it to various financial risks particularly associated with interest rate risk on its external variable rate loans 
and borrowings which are addressed by using derivative instruments to hedge this exposure the company has a policy not to enter into 
speculative trading of financial derivatives
the other main risks besides interest rate are foreign currency risk credit risk and liquidity risk and the policies relating to these risks are 
discussed in detail below
interest rate risk 
interest rate risk arises from the possibility that changes in interest rates will affect the value of the company’s interestbearing financial 
liabilities and assets the company does not hedge its exposure on its interest bearing funding tofrom subsidiaries 
interest rate sensitivity analysis
the impact on the company’s pretax profit and equity due to a reasonably possible change in interest rates is demonstrated in the table 
below the analysis assumes that all other variables remain constant
   pretax profit equity
    
     100 basis  100 basis  100 basis 100 basis
     point increase point decrease point increase point decrease
     us’000 us’000 us’000 us’000
31 december 2008     521 521 210 695
31 december 2007     412 412 47 173
the following table reflects the maturity profile of interest bearing financial liabilities and assets 
year ended 31 december 2008
  within 12 23 34 45 more than 
  1 year years years years years 5 years total
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
floating rates 
revolving credit facilities note 14  – 20936 4212 6552 7020 – 38720
term loan note 14  5000 5625 7813 9375 6185 – 33998
amount due to subsidiaries  – 284930 – – – – 284930
interest rate collar   432 – – – – – 432
   5432 311491 12025 15927 13205 – 358080
financial assets
floating rates
cash and shortterm deposits note 11  14516 – – – – – 14516
year ended 31 december 2007
  within 12 23 34 45 more than 
  1 year years years years years 5 years total
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
floating rates
revolving credit facilities note 14  6500 – 448 2015 3134 3356 15453
term loan note 14  1250 5000 5625 7813 9375 6247 35310
amount due to subsidiaries  – 75757 – – – – 75757
interest rate collars   – 56 – – – – 56
   7750 80813 6073 9828 12509 9603 126576
financial assets
floating rates
cash and shortterm deposits note 11  8406 – – – – – 8406
financial liabilities in the above table are disclosed gross of debt acquisition costs and effective interest rate adjustments of us2254000 
2007 us939000
interest on financial instruments classified as floating rate is repriced at intervals of less than one year 
128
petrofac annual report 
and accounts 2008 derivative instrument designated as cash flow hedge 
at 31 december 2008 the company held the following derivative instrument designated as a cash flow hedge in relation to floating rate 
interestbearing loans and borrowings
    fair value of assetliability
    
 nominal amount   2008 2007
instrument us equivalent period to maturity date commenced us’000 us’000
us libor interest rate collar us34138000 1 year 31 december 2007 432 56
during 2008 an interest expense of us7000 2007 nil was recognised as the time value portion and us425000 2007 us56000 was 
classified as equity being the intrinsic value portion of the above derivative financial instrument
foreign currency risk
almost all of the financial assets and liabilities of the company are denominated in us dollars the foreign currency exposure is limited to 
sterling 3300000 us4820000 of its interest bearing loans and borrowings
the following table summarises the impact on the company’s pretax profit and equity due to change in the fair value of monetary assets 
liabilities and derivative instruments of a reasonably possible change in us dollar exchange rates with respect to different currencies
   pretax profit equity
    
     10 us dollar  –5 us dollar  10 us dollar  –5 us dollar 
      rate increase  rate decrease  rate increase  rate decrease 
     us’000 us’000 us’000 us’000
31 december 2008     425 212 – –
31 december 2007     82 41 – –
credit risk
the company’s principal financial assets are cash and short term deposits and amounts due from subsidiaries 
the company manages its credit risk in relation to cash and short term deposits by only depositing cash with financial institutions that 
have high credit ratings provided by international credit rating agencies
liquidity risk
the company’s objective is to maintain a balance between continuity of funding and flexibility through the use of term loans and revolving 
credit facilities to reduce its exposure to liquidity risk 
the maturity profiles of the company’s financial liabilities at 31 december 2008 are as follows 
year ended 31 december 2008
       contractual
  6 months 612 12 25 more than undiscounted carrying
  or less months years years 5 years cash flows amount
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
interestbearing loans and borrowings  2500 2500 26561 41157 – 72718 70464
trade and other payables   492 – – – – 492 492
amounts due to subsidiaries  – 284930 – – – 284930 284930
derivative instruments  – 432 – – – 432 432
interest payable  1 – – – – 1 1
interest payments  3576 3578 1796 2559 – 11509 –
   6569 291440 28357 43716 – 370082 356319
129
petrofac annual report 
and accounts 2008
financial statements
notes to the company 
financial statements notes to the company financial statements continued
at 31 december 2008
15 risk management and financial instruments continued
liquidity risk continued
year ended 31 december 2007
       contractual
  6 months 612 12 25 more than undiscounted carrying
  or less months years years 5 years cash flows amount
  us’000 us’000 us’000 us’000 us’000 us’000 us’000
financial liabilities
interestbearing loans and borrowings  – 7750 5000 22813 15200 50763 49824
trade and other payables   586 – – – – 586 586
amounts due to subsidiaries  – 75757 – – – 75757 75757
derivative instruments  – – 56 – – 56 56
interest payable  16 – – – – 16 16
interest payments  2633 2635 1753 5832 1218 14071 –
   3235 86142 6809 28645 16418 141249 126239
the company uses various funded facilities provided by banks and its own financial assets to fund the above mentioned financial liabilities
capital management
the company’s gearing ratio is as follows
       2008 2007
       us’000 us’000
cash and shortterm deposits        14516 8406
interestbearing loans and borrowings a       70464 49824
net debt b       55948 41418
total equity c       111741 108401
gross gearing ratio ac       631 460
net gearing ratio bc       500 382
fair values of financial assets and liabilities
the fair value of the company’s financial instruments and their carrying amounts included within the company’s balance sheet are set 
out below 
   carrying amount fair value
    
     2008 2007 2008 2007
     us’000 us’000 us’000 us’000
financial assets
cash and shortterm deposits     14516 8406 14516 8406
longterm loan receivable from a subsidiary    219491 34541 219491 34541
financial liabilities
interestbearing loans and borrowings     70464 49824 70464 49824
interest rate collar     432 56 432 56
the fair values of interest rate collars have been calculated by discounting the expected future cash flows at prevailing interest rates 
the fair values of longterm interestbearing loans and borrowings and longterm receivable from a subsidiary are their amortised costs 
determined as the present value of discounted future cash flows using the effective interest rate the company considers that the carrying 
amounts of trade and other receivables amounts due fromdue to subsidiaries trade and other payables and other current financial 
liabilities approximate their fair values and are therefore excluded from the above table
130
petrofac annual report 
and accounts 2008 16 related party transactions
the company’s related parties consist of its subsidiaries and the transactions and amounts due todue from them are disclosed in the 
accompanying notes to the company financial statements
17 share capital
the movements in share capital are disclosed in note 20 to the consolidated financial statements of the group
18 retained earnings
        us’000
at 1 january 2007        11898
net profit for the year        61294
dividends paid note 7        38774
at 1 january 2008        34418
net profit for the year        91859
dividends paid note 7        64700
as at 31 december 2008        61577
131
petrofac annual report 
and accounts 2008
financial statements
notes to the company 
financial statements other financial information
at 31 december 2008
oil  gas reserves unaudited
 europe africa southeast asia total
    
  oil  ngls gas oil  ngls gas oil  ngls gas oil  ngls gas oil equivalent
  mmbbl bcf mmbbl bcf mmbbl bcf mmbbl bcf mmboe
proven reserves
at 1 january 2008
developed – – 26 241 32 – 58 241 99
undeveloped 122 – – 20 02 – 124 20 128
proven 122 – 26 261 34 – 182 261 227
changes during the year
revisions – – 02 62 08 – 10 62 01
additions – – – – – – – – –
acquisitions – – – – – – – – –
production – – 04 11 07 – 11 11 13
at 31 december 2008   
developed – – 24 187 35 – 59 187 91
undeveloped 122 – – 01 – – 122 01 122
proven 122 – 24 188 35 – 181 188 213
probable reserves   
at 1 january 2008 114 – – 64 15 – 129 64 140
changes during the year   
revisions 14 – – 14 02 – 12 14 14
additions – – – – – – – – –
acquisitions – – – – – – – – –
production – – – – – – – – –
at 31 december 2008 100 – – 50 17 – 117 50 126
total proven  probable reserves
at 1 january 2008 236 – 26 325 49 – 311 325 367
changes during the year 
revisions 14 – 02 76 10 – 02 76 15
additions – – – – – – – – –
acquisitions – – – – – – – – –
production – – 04 11 07 – 11 11 13
at 31 december 2008 222 – 24 238 52 – 298 238 339
notes
 these estimates of reserves were prepared by the group’s engineers and audited by a competent independent third party based on the 
■ ■
guidelines of the petroleum resources management system sponsored by the society of petroleum engineers the world petroleum 
council the american association of petroleum geologists and the society of petroleum evaluation engineers
 the reserves presented are the net entitlement volumes attributable to the company under the terms of relevant production sharing 
■ ■
contracts and assuming future oil prices equivalent to us55 per barrel brent
 for the purpose of calculating oil equivalent total reserves volumes of natural gas have been converted to oil equivalent volumes at the 
■ ■
rate of 5800 standard cubic feet of gas per barrel of oil
glossary
mmbbl – million barrels
bcf – billion cubic feet
mmboe – million barrels of oil equivalent
ngls – natural gas liquids
132
petrofac annual report 
and accounts 2008 shareholder information
at 31 december 2008
petrofac shares are traded on the london stock exchange using 
code ‘pfcl ’ 
registrar
capita registrars jersey limited
12 castle street
st helier
jersey je2 3rt
uk transfer agent
capita registrars
the registry
34 beckenham road
beckenham
kent br3 4tu
company secretary and registered office
ogier corporate services jersey limited
whiteley chambers
don street
st helier
jersey je4 9wg
auditors
ernst  young llp
1 more london place
london se1 2af
legal advisers to the company
as to english law
norton rose llp
3 more london place
london se1 2af 
as to jersey law
ogier
whiteley chambers
don street
st helier
jersey je4 9wg
joint brokers
credit suisse
1 cabot square
london e14 4qj
nomura
25 bank street
london e14 5le
corporate and financial pr
bell pottinger corporate  financial
6th floor holborn gate
330 high holborn
london wc1v 7qd
financial calendar
15 may 2009  annual general meeting
22 may 2009  final dividend payment
26 august 2009  interim results announcement
november 2009  interim dividend payment
dates correct at time of print but subject to change
the group’s investor relations website can be found through wwwpetrofaccom
designed and produced by conrandesigngroup 44 020 7284 5200
photography by sam robinson
printed in the uk by mpg impressions environmental management system 
iso 14001 certified and forest stewardship council fsc chain of custody 
certified
this report is printed utilising vegetable based inks on revive pure white silk  
which is produced with 85 deinked postconsumer waste 15 unprinted 
preconsumer waste and revive 100 uncoated which is manufactured from 
100 post consumer reclaimed material all pulps used are elemental chlorine 
free ecf and the manufacturing mill is accredited with the iso 14001 standard 
for environmental management
cert no sgscoc003115
photograph mesaieed complex qatar
■
  maintaining and 
improving on high 
safety standards  
 
 
 
■
  leveraging customer 
relationships by 
providing a range of 
services across the life 
cycle of an asset 
■
  generating predictable 
longterm returns from 
a diversified portfolio of 
investments leveraging 
the group’s service 
capabilities in order 
to understand and 
manage better  
the risks involved
■
  focusing on regions 
with major hydrocarbon 
reserves where 
significant capital  
and operational 
expenditures  
are expected
■
  expanding our 
established service 
offering into new 
countries and regions 
■
  assisting customers  
in achieving their  
local content goals  
by accessing incountry 
resources and 
improving the 
competence and 
technical skills of  
local workforces 
■
  improving revenue and 
earnings stability 
through a diversified 
and complementary 
business model 
 
■
  attracting and retaining 
specialists and key 
personnel 
 
■
  identifying acquiring 
integrating and 
developing 
complementary 
businesses where 
appropriate
driving 
business value
petrofac is an international provider of facilities 
solutions to the oil  gas production and processing 
industries by creating innovative commercial models 
to deliver services supporting our people and 
developing longterm relationships we drive  
business value for our shareholders customers  
and employees
we aim to generate sustainable growth in value for  
our shareholders by being the leading international 
provider of facilities solutions to the oil  gas 
processing industry we aim to do this by
shareholder information petrofac annual report and accounts 2008
annual report  
and accounts 2008
driving
business 
value
petrofac services limited
117 jermyn street
london sw1y 6hh
united kingdom
t 44 20 7811 4900 
f 44 20 7811 4901
wwwpetrofaccom


Summary:
 14
petrofac annual report 
and accounts 2008 business review
2008 was another very successful year for petrofac  
what are the main factors behind this achievement 
i am very proud of our performance during the year which was the 
direct result of the expertise and commitment of our workforce 
around the world our people set themselves the highest standards 
and do their utmost to achieve them at all times and on every 
project we work on 
petrofac has always had an entrepreneurial culture and this is 
something that we strive to maintain we try and do things 
differently and are open to new ideas and new commercial models 
that deliver more value for our customers as well as for our 
shareholders for example we can provide our services through a 
number of commercial formats from straightforward reimbursable 
arrangements with or without an element of performancebased 
income to lumpsum turnkey agreements all the way through to 
coinvesting with our customers in upstream and infrastructure 
projects where that meets their needs and ours
another important factor behind our success is the number of our 
people who own shares in the company and therefore have a 
direct personal interest in delivering longterm and sustainable 
value more than 40 of our shares belong to employees and 
approximately one in five of our employees are either shareholders 
or participate in our share award schemes 
how is the economic downturn impacting on petrofac
triggered by the liquidity crisis in the banking sector the broader 
macroeconomic environment clearly changed very dramatically 
during the second half of 2008 and although governments across 
the world have taken concerted action to support the banking 
system and to stimulate demand confidence remains low and 
the nearterm prospects for the global economy continue to be 
uncertain in response to rapidly falling forecasts of economic 
activity all commodity prices including oil have fallen dramatically 
from the alltime highs hit last year
against this extremely challenging backdrop i am pleased to say 
that petrofac remains in a strong position and although we cannot 
ignore external circumstances i believe we are very wellplaced 
to maintain our growth our geographic focus particularly in the 
middle east and africa where the cost of oil production is relatively 
low the extensive longterm relationships we have established with 
worldclass national and international oil companies and our 
competitive cost structure all put us in a strong competitive  
position as we have shown by our continuing success in winning 
new business 
what have been the key events of 2008
the engineering  construction division continued to execute 
projects with great skill and resourcefulness 2008 saw many 
impressive achievements including the securing of a major 
contract to engineer procure and build a gas pipeline to the mina 
alahmadi refinery in kuwait and new contracts to construct gas 
treatment plants for the ebla and jihar projects in syria
in operations services we completed our first full year of operating 
dubai’s offshore assets while our operations continue to progress 
well sadly a helicopter incident occurred approximately 70 
kilometres off the dubai coast on 3 september 2008 there were 
no petrofac personnel onboard but the two aircrew and five 
passengers who worked for companies contracted to dubai 
petroleum all lost their lives this was a terrible tragedy and the 
investigation by the authorities in dubai to identify the cause is still 
ongoing we work in some challenging environments and incidents 
like this show why the safety of our people and all those impacted 
by our operations is absolutely key to everything we do at petrofac 
during 2008 operations services finalised arrangements to 
provide turnkey operations services on the northern producer the 
floating production facility on the don fields in the north sea which 
are being developed by our energy developments business and 
extended our duty holder contracts with bhp billiton irish sea 
pioneer and venture production kittiwake
energy developments made significant progress with the don fields 
during the year and first oil is expected during the first half of 2009 
in tunisia the commercial export of gas from the chergui plant 
commenced in august we have been able to expand the plant 
capacity by more than 20 and have delivered higher than 
expected productivity from the reservoir as a result we are 
negotiating a revised higher volume gas sales contract with 
the offtaker 
what does the sales pipeline look like for 2009 and beyond 
it continues to look very good indeed our customers especially 
those in our key geographies of the middle east and north africa 
are making longterm decisions based on relatively low longrange 
forecasts for oil prices so far in 2009 we have secured contract 
awards of around us28 billion see page 32
looking at the mediumterm where and how do you expect 
petrofac to grow 
for the last five years we have achieved very healthy growth in 
revenue in excess of 35 per annum and i believe we can maintain 
good growth over the mediumterm considering the strength of 
our backlog and the visibility this gives to our earnings
we will retain our focus on the middle east and africa the 
commonwealth of independent states the uk continental shelf 
ukcs and the asia pacific region these are areas where we have 
a wealth of established relationships and a proven track record 
we will continue to grow organically as well as through selective 
acquisitions that add depth and breadth to our capability
petrofac’s group chief executive ayman asfari comments on 
the progress made by the company during 2008 and its plans 
for the future
interview with the group chief executive
 subsequent to the approval of the 2008 annual report and accounts by the 
directors on 6 march 2009 the group announced a further lumpsum epc 
award for the el merk project in algeria with a contract value of us22 billion 
this takes the total of the group’s new contract awards in 2009 to us50 billion
15
petrofac annual report 
and accounts 2008
interview with the  
group chief executive what is the rationale behind the recent restructuring
the new organisational structure that was implemented on 
1 january 2009 will be the basis for growth in the mediumterm 
a key driver for our current success has been our differentiated 
offering in the marketplace and it is important that we build on this 
model by promoting collaboration and cooperation between our 
various business units
following extensive debate among the executive team and senior 
management throughout 2008 it became clear that we needed to 
evolve our structure in order to improve integration and create a 
broader platform for growth the new structure is outlined in detail 
on pages 18 and 19
how would you summarise the year and the outlook
overall 2008 was an excellent year for petrofac our backlog 
continued geographic focus new structure and strong bidding 
pipeline combined with the commitment and dedication of our 
people around the world are the foundations for what i believe 
will be a very successful future
ayman asfari
group chief executive
in what way will the strategy develop over the short to 
mediumterm 
our strategy is clear and unchanged we will maintain our focus on 
oil  gas while also broadening our capability into areas such as 
offshore engineering and liquefied natural gas as well as expanding 
our geographic footprint into markets including saudi arabia and 
west africa
this strategy is delivering tremendous opportunities for organic 
growth however at the same time we will continue to look for 
acquisitions that fit with our strategic objectives caltec and eclipse 
came into the group in 2008 and i am pleased to say that both are 
adding valuable depth to the services we provide to our customers 
and have improved our capability to deliver projects through the 
production solutions business unit using a gainshare model
partnership will also remain a key element in the strategy the year 
saw us form joint ventures in indonesia with ikpt and in abu dhabi 
with mubadala petroleum services company 
are you making progress on providing more integrated 
capabilities to projects
many customers are keen to access a wider range of our services 
on specific projects and we have continued to work hard to 
integrate our capabilities more closely
there are numerous examples of our three divisions working 
together to deliver benefits to customers for example at the 
chergui gas plant in tunisia we are not only coinvesting thereby 
sharing the risk and aligning ourselves with our customer’s 
interests but we have also provided engineering design 
procurement and build expertise and are currently supporting the 
ongoing operations 
through production solutions a new business unit created by our 
recent restructuring we are now extending the group’s offering  
by packaging our services and delivering them to customers  
on a quasiequity or gainshare basis where our returns are 
directly related to the value added to the customer through 
enhanced production
interview with the group chief 
executive continued
16
petrofac annual report 
and accounts 2008 business review
1
 northern producer don field
2
   ebla syria 
3 4
 chergui tunisia
1
4
3
2
17
petrofac annual report 
and accounts 2008
interview with the  
group chief executive