24 July 2015, News Wires – Italian oilfield services giant Saipem is working on a restructuring plan as it and rivals adjust to a prolonged low oil price environment, according to a report.
The subsidiary of compatriot major Eni has hired US management consultancy Bain & Company to help draw up the plan, Reuters reported, citing numerous unidentified sources.
“The plan is called ‘Fit to 60’ — whipping the company into shape to deal with life with crude at $60 a barrel,” the news wire quoted one source as saying.
Another source told Reuters that the restructuring plan is necessary ahead of a planned capital raising effort, likely to happen before the end of the year.
“They won’t attempt a cash call without first a geographic review of its businesses and costs,” the source told Reuters.
A third source said the plan envisaged no major job cuts in Italy, adding it would be discussed at a board meeting next week.
Nobody was immediately available for comment at Saipem early on Friday afternoon.
Eni is thought to be looking to sell down its 43% stake in Saipem, which has recently seen a large and lucrative Black Sea pipeline deal with a Gazprom-led consortium quashed.
Saipem’s contract – originally to lay the first line of the South Stream pipeline, a project that was to transport gas from Russia to Bulgaria via the Black Sea but has been cancelled – was terminated earlier this month after the Italian player and the project’s operator failed to agree new contractual terms. The original contract was worth €2.4 billion ($2.63 billion today).
South Stream was subsequently scrapped in favour of TurkStream, a pipeline set to bring gas from Russia to the European side of Turkey. Like South Stream, it is set for capacity of 63 billion cubic metres of gas per annum.
There is nothing to suggest that Saipem will be excluded from bidding afresh for work on TurkStream, despite the cancelled pipelaying contract.