Saipem-Gazprom: friendly agreement on South Stream by the end of March
The Italian contractor records soaring orders although closing 2018 in the red due to depreciation and reorganization
As announced by Saipem Managing Director Stefano Cao, the ongoing dispute between Saipem and South Stream BV, Dutch company 100% controlled by Gazprom, started after cancellation of the contract by which the Russian gas giant had appointed the Italian contractor for the construction of South Stream pipeline, could be finally sorted out by the end of March.
San Donato Milanese-based company showed substantial growth indicators, however net results went down to – 500 million Euro, due to few special items.
After the decision taken by Moscow Government to quit the South Stream project (to support the TurkStream), which was supposed to connect Russia to Europe crossing the Black Sea, Gazprom cancelled the contract sealed with Saipem, appointed to install the pipe-line underwater.
Ex Eni's subsidiary was badly affected by the situation, in 2015 they recorded over 1 billion Euro lost revenues and, for this reason, they started a legal dispute: Saipem claimed substantial compensation, while South Strem BV stated they had already paid freight rates for the Castoro 6 and Saipem 7000, which couldn't operate after the contract was cancelled.
According to Cao negotiations with South Stream BV are improving and an agreement could be sealed by the end of March.
“This year we started an in-house reorgaization aimed at better seizing market opportunities.
We gained a substantial number of new orders in all business sectors, particularly the E&C offshore and E&C onshore, continuing our attempt to offset oil and non-oil price related projects”, added Cao.
Revenues went down from 8.99 billion Euro in 2017 to 8.52 billion euro in 2017, adjusted EBITDA grew from 964 millions to 1 billion, although the same indicator (before adjustment) dropped from overall 862 millions in 2017 to 848 millions in 2018.
Substantial depreciations and reorganization expenses, standing at 497 million Euro, drove net results in the red, down to – 472 million Euro in 2018.
Net adjusted results (cleared from special items) recorded 25 million Euro, dropped versus 46 millions achieved in 2017.
Net debt decreased from 1.29 billions recorded at December 31st 2017 to 1.15 billions the subsequent year.
In 2018 the company received 8.75 billion Euro orders, versus 7.39 billions attained in 2017.
At December 31st 2018 the left order portfolio reached 12.61 billions (12.39 billions at December 31st 2017).
The company's management confides the situation will be consolidated this year, estimated revenues were set at 9 billion Euro.
Regarding single business units, Engineering & Construction Offshore branch recorded 3.85 billion revenues in 2018, + 4.3% versus 2017, while business Engineering & Construction Onshore sales went down: 3.76 billions, -10.3% versus former year.
Even the offshore drilling unit's revenues dropped from 24.1% to 465 millions, particularly due to disruption of the Scarabeo 5 and Scarabeo 8, not operating for a year and a half.
According to Saipem report, the situation could go even worse in 2019, Scarabeo 5 won't be operating for 365 days, Scarabeo 7 for 214 and Scarabeo 9 for 106 days.