Gazprom Cancels Saipem's Pipe-Laying Contract for Turkish Stream

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Gazprom Cancels Saipem's Pipe-Laying Contract for Turkish Stream

Tue, 07/14/2015 - 11:30
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Turkish Stream gas pipeline route(© 2015 Gazprom)
Turkish Stream gas pipeline route(© 2015 Gazprom)

In a major development throwing into question the viability of the proposed Turkish Stream Gas Pipeline Project, Saipem announced that Gazprom had cancelled its $2.6 billion contract to build the pipeline on the floor of the Black Sea.

Saipem had already dispatched several of its pipe-laying ships to the Black Sea and one, the Castoro 6, was preparing to lay the first pipe segments for the project, when it received notice from Gazprom.

Gazprom said that it has begun looking for other contractors, but Nicholas Green of Sanford C. Bernstein in London was cited by the New York Times as saying that while "the Turkish Stream project might still proceed, searching for a new contractor with the required pipe-laying ships would delay the project at least six months."

He also said that Gazprom’s treatment of Saipem probably had damaged the Russian company’s reputation with other contractors. “I would imagine that international contractors would definitely think twice” about working for Gazprom, he said.

The abrupt cancellation of the Saipem contract mirrors the Russian decision late last year to put an end to South Stream.

South Stream Transport, the Amsterdam-based subsidiary of Gazprom that is in charge of the offshore section of the pipeline, said the companies could not reach an agreement because of “numerous operational and commercial issues related to the new Turk Stream project. Other project-related works remain ongoing and the company will commence discussions with potential offshore pipe-laying contractors for line one of the Turk Stream project shortly.”

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