Saipem, PBG Problems Threaten LNG Terminal Progress in Poland

Warsaw has been questioning Rome about the condition of Saipem S.p.A., the main contractor building Gazoport in Swinoujscie.

Poland's Ministry of Treasury informed that state-owned Polskie LNG is closely monitoring developments concerning Saipem and Polish consortium PBG.

Visiting the building site in Swinoujscie the Minister said he has been in touch with his Italian counterpart in charge of Saipem. "He assured that deadline will be met," said Mikolaj Budzanowski to reporters.

Saipem, a subsidiary of Eni, is under investigation into allegations that it paid bribes to win contracts in Algeria. The scandal led to the resignation of Saipem's CEO Pietro Franco and prompted the Eni's CEO Paolo Scaroni to warn that the oil supermajor could sell its Saipem shares.

Even more questions have been raised by the condition of Polish building group PBG.  According to some publications in Poland the company could abandon the site any week, joining Hydrobudowa, that left work on Gazoport last year, which blamed "capital-thirsty road contracts, and lack of total payment for the contract on the National Stadium."

The first LNG terminal in Poland and the whole of Central and Eastern Europe has aims to reduce the dependence of the country on Russian gas imports. Its completion was scheduled for mid-2014.  The terminal will be able to receive up to 5 bcm per year with a possibility of extension to 7.5 bcm per year.

A 1.4 bcm contract with Qatargas includes a take or pay clause and states that deliveries will start no later than January 2015. If Gazoport is not ready, Polish gas firm PGNiG will be in trouble as the price of Qatari gas, contracted in 2009 and oil-indexed, is considerably higher than current market prices.

Last November, the Polish government announced plans to renegotiate price in the Qatar contract.