Saipem Receives Termination Note For Black Sea Pipeline Contract

After witnessing its shares going up and down over the last days, Saipem received notification of the termination for convenience of the South Stream BV contract. The ENI’s subsidiary wrote it on Thursday, explaining it received the communication late in the evening of Wednesday.

‘The termination for convenience is a standard contractual clause which provides for the termination of the agreement in the absence of a contractual breach, with compensation determined in accordance with the terms and conditions of the contract’ reads the note released by the leader in the provision of engineering, procurement, project management and construction services. 

The evolution of the share price over the last few hours indicate that it remains unclear what will be the effect of the termination of the $2.2 billion contract on the company’s fortune. 

Gazprom said it canceled the deal because it couldn’t agree with Saipem on terms, Sergei Kupriyanov, a spokesman for the Moscow-based company, told Bloomberg.  

The cancellation comes a week after Russia approved access for Saipem’s ships to lay pipes in the Black Sea.

‘Saipem confirms that the pipelaying vessel Castoro 6 was in the process of mooring in Russian waters to start pipelaying activities’ the Italian company wrote on its website. 

The cancellation might also have an impact on the Turkish Stream project, and it could be related to divergences between Turkey and Russia about the gas pipeline. What’s very likely is that the cancellation of the contract will slow down the construction of the Turkish Stream. In other words, the notification further increases uncertainties.