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Decision of the Arbitrators on the LPG Dispute with Sonatrach

Source: www.gulfoilandgas.com 12/22/2017, Location: Africa

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The ICC International Court of Arbitration has notified the parties of the decision of the arbitral tribunal in the dispute ongoing since March 2014 between, on the one hand, Saipem SA and Saipem Contracting Algerie SpA (collectively “Saipem”) and, on the other, Sonatrach, in connection with the contract for the construction in Algeria of a plant for the ‘extraction des liquides des gaz associes Hassi Messaoud et separation d’huile (project “LPG”), the contract for which was entered into on 12 November 2008.

In the decision relating to the LPG arbitration the arbitrators awarded to Sonatrach – in a decision taken by majority vote – compensation in respect of a counterclaim for loss of production in an amount, including interests, of approximately 135 million USD on the basis of an alleged gross negligence which Saipem denies.

Saipem will review the reasons for the decision and reserves its rights in respect of any further recourse against the award.

The decision of the arbitrators to award the above-mentioned counterclaim - in the absence of a positive result in the further legal actions which Saipem reserves the right to take - will result in costs in an amount equal to such counterclaim in the 2017 financial report, costs which have not been budgeted for in the economic guidance. The LPG arbitration – together with other 3 arbitrations ongoing between Saipem and Sonatrach (in one instance also with First Calgary Petroleums LP) – is described in detail in Saipem's Interim Financial Report 2017.

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