Mozambique uncertainty weighs on Saipem’s outlook

Italian energy services company Saipem has not been able to provide an update on its 2021 guidance due to uncertainty over Mozambique LNG after French energy group Total declared force majeure on the project threatened by an unstable situation in the north of the Cabo Delgado province.

“Following the recent suspension of activities, evaluations are underway in close cooperation with the client to preserve the value of the project,” Saipem said on Wednesday.

The approximately €4bn project is included in Saipem Q1 backlog, of which some €1.4bn is related to activities from April to year-end 2021.

Saipem posted quarterly net loss of €120m, improving from €269m loss in the prior-year comparable period. Nevertheless, it saw revenues fall at €1.62bn versus €2.17bn same time last year due to pandemic crisis and a slowdown of activities and the rescheduling of projects, including the recent events in Mozambique.

“The market will be promptly updated when the situation becomes sufficiently clear and impacts can consequently be determined,” Saipem said in a statement.

Total withdrew all Mozambique LNG project personnel from the Afungi site on April 26, following numerous insurgents attacks on the town of Palma, close to the project site. The move to suspend the $20bn project has brought insecurity to many contractors.

Saipem-led joint venture with McDermott and Chiyoda secured the $8bn engineering, procurement and construction contract for Mozambique LNG project in June 2019.

Adis Ajdin

Adis is an experienced news reporter with a background in finance, media and education. He has written across the spectrum of offshore energy and ocean industries for many years and is a member of International Federation of Journalists. Previously he had written for Navingo media group titles including Offshore Energy, Subsea World News and Marine Energy.
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