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.
Write to Eric Sylvers at eric.sylvers@wsj.com
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