Italy's Saipem, Russian Gazprom Near Settlement
Italian engineering company Saipem hopes to reach a settlement with Russian gas giant Gazprom in a long-running dispute over the South Stream project as early as the end of March. CEO Stefano Cao also told journalists that the agreement would be financial and commercial. Saipem's original claim was for $660mn ($750mn), when Russian president, Vladimir Putin, announced December 2014 that the line under the Black Sea to Turkey would not go ahead.
According to news agency AGI, Cao said that the details were obviously "confidential" but it does comprise a cash and a commercial part. He added Saipem was willing to sit down at the table and negotiate with the other party. Now that this has finally been arranged, he said, "we have to check with the other party if there are conditions for an agreement," without forgetting that Gazprom "is the biggest Russian energy company and it has many projects: let's see where we can use our capabilities and at the same time facilitate the closure of arbitration."
He was speaking as Saipem reported a loss of €472mn for 2018 but expects to see an improvement this year. The firm noted that the loss was driven by lower revenue and write downs. The result represented a deterioration on 2017’s loss of €328mn.
The company, which is owned by Eni and state lender Cassa Depositi e Prestiti, said the result fully confirmed guidance “in what remains a challenging market scenario”. Saipem said it is scouting for market opportunities and expects revenue to expand to around €9bn in 2019 from €8.5bn.
Stabilising crude prices are thought likely to improve the performance of the oil services segment. Saipem said adjusted core earnings are expected to equal more than 10% of sales this year. Investments of about €500mn are being eyed.
“We are now ready to exploit future market opportunities with the flexibility required,” Cao said in a statement. “Over the course of the year we have redefined the objectives of company repositioning, which are already demonstrating the appropriateness and timeliness of the strategic choices implemented. In particular, this includes the company reorganisation, which means we are now ready to exploit future market opportunities with the flexibility required,” he said.
“We have been awarded a consistent number of new contracts in all business sectors, especially in Offshore E&C and Onshore E&C, while pursuing a path towards attaining a balance between oil and non-oil price related projects,” he added. Among the new contracts was one from the partners in the Tortue field offshore Senegal, and believed to be worth several hundred million euros to Saipem.