Saipem Awarded $1.8 Billion Pipeline Contract for Kashagan Project

By Eric Sylvers

Milan--Saipem SpA (SPM.MI), the oil services company controlled by oil major Eni SpA (E), Friday said it has been awarded a $1.8 billion pipeline contract for the troubled Kashagan natural gas and oil project in the Caspian Sea off Kazakhstan.

Saipem will build two 95-kilometer pipelines to connect an onshore plant in Kazakhstan with an artificial island built in the Caspian Sea. Some work--which includes engineering, dredging and the burial of the 28-inch diameter pipelines--will be outsourced to subcontractors, Saipem said in a press release. Construction is expected to be completed by the end of next year.

The new pipeline will replace another one Saipem built that had to be replaced because it began leaking just weeks after the first gas, which has a high concentration of highly corrosive hydrogen sulfide gas, began to flow. The new carbon steel pipeline will be internally clad with a corrosion resistant alloy.

The Kashagan project is being developed by a consortium that includes Eni, Total SA, Royal Dutch Shell PLC and Exxon Mobile Corp. It has been plagued by delays and is running far over budget with the consortium having already spent more than $50 billion on Kashagan in the past 18 years.

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