Saipem, Sonatrach Bury Hatchet (Update)
Updates with reported compensation figure to be paid, in 4th para
Algerian state producer Sonatrach and Italian engineering contractor Saipem have decided to settle their mutual differences amicably, said Saipem in a statement February 14.
It said they have signed an agreement to put an end to legal actions that were in course concerning: a contract for the construction of a gas liquefaction plant at Arzew; a contract to build three LPG trains, along with oil separation unit, and condensate production units at Hassi Messaoud; a contract to build the LZ2 24'' LPG pipeline (line and station) at Hassi R'Mel; and a contract for the construction of a gas and production unit in the Menzel Ledjmet field on behalf of a Sonatrach-Eni joint venture there.
Saipem's statement did not clarify whether the contracts had been fulfilled and then payment disputed, or rescinded. However it said the agreement was the result of constructive dialogue and represents an important step forward in relations between the two companies. It added that both companies had "expressed their satisfaction at having reached a definitive agreement that puts an end to litigations that were detrimental to both parties."
Algerian state news agency APS said that the Paris-based International Court of Arbitration had previously ordered Saipem to pay $135mn to Sonatrach in respect of a complaint made in 2014 over a Hassi Messaoud related contract concluded in 2008. It said this week's agreement was signed in Algiers by Sonatrach CEO Abdelmoumen Ould Kaddour and his Saipem counterpart Stefano Cao February 14. In a later update to its story, APS reported that Sonatrach will now be paid $200mn by Saipem to settle the dispute.
Saipem's run-ins with Sonatrach date back a decade. Saipem and its former officials have been named in various Italian court actions relating to alleged corruption in Algeria, something that Saipem and its former majority owner Eni have always denied. Eni's stake in Saipem is now reduced to 30.54%, making it the company's largest shareholder, but Eni has spoken in the recent past about reducing its stake further.