Saipem hit with two-year suspension of public contracting activity in Brazil

Home Fossil Energy Saipem hit with two-year suspension of public contracting activity in Brazil

January 15, 2024,
by

Melisa Cavcic

Italy’s engineering, drilling, and construction services provider Saipem is facing restrictions on new contracts in Brazil due to being banned from making new deals with the country’s public administration over the next couple of years.

Illustration; Source: Saipem

The Brazilian administrative authority, Controladoria-Geral da União (CGU), issued on January 12, 2024, its final ruling in the administrative proceedings initiated against Saipem and Saipem do Brasil regarding alleged irregularities in the award of a contract for the installation of a gas pipeline – dating back to December 2011 – by the BM-S-11 consortium.

According to the Italian player, the CGU has amended its previous interim decision, consisting of the ban on contracting with the Brazilian public administration issued on December 29, 2022, and substituted it with a “temporary” suspension limited to a period of two years.

“The reclassification of the sanction was obtained also thanks to the recognition by the same CGU of the effectiveness of the compliance model of the two companies. The sanction has no impacts on the ongoing projects in Brazil since it applies solely to potential new contracts and concerns exclusively dealings with the public administration,” explained the company.

However, Saipem and Saipem do Brasil are determined to appeal the decision, which they see as “inconsistent” with what the companies demonstrated during the proceedings.

Saipem secured multiple new deals in 2023. At the end of November 2023, the Italian giant got its hands on two new offshore contracts worth approximately $1.9 billion for work with ExxonMobil in Guyana and Equinor in Brazil.

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Prior to this, the company won a multi-billion-dollar letter of award (LOA) with the UAE’s ADNOC, in consortium with National Petroleum Construction Company (NPCC). The Italian giant also recently sold an FPSO vessel, which is working in the Espírito Santo Basin offshore Brazil.