COMPANY

Offshore

Offshore Construction

Saipem boasts a strong competitive position in the market of large, complex projects for the development of offshore hydrocarbon fields leveraging on its technical and operational skills, supported by a world-class fleet, the ability to operate in complex environments, and engineering and project management capabilities acquired on the market (among the main acquisitions conducted over the recent years, Bouygues Offshore is worth mentioning).
Saipem intends to consolidate its market share strengthening its EPIC oriented business model and leveraging on its satisfactory long-term relationships with the major oil companies and NOCs.
Higher levels of efficiency and flexibility are expected to be achieved by outsourcing the management of EPC projects (EPC hub in India) and non core engineering activities in cost efficient areas reaching economies of scale in its engineering hubs and employing local resources in contexts where this represents a competitive advantage, directly managing offshore construction processes through the creation of a large construction yard in South-East Asia and revamping/upgrading its construction fleet.
Over the next four years, Saipem will significantly invest in the upgrading of its world-class fleet, by building a pipelayer (CastorOne), a field development ship for deepwater (FDS 2) and other supporting assets for offshore activity.
These investments will allow the upgrading of operational capabilities in the deepwater and in sub Arctic contexts. Investments will also regard the upgrading of yards and related equipment and facilities and the creation of local construction centres to support the execution of important projects.

2008 Activities
Offshore drilling
significant contracts

In 2008, revenues of the offshore construction segment were €3,818 million, accounting for 42% of total revenues. Contribution from operations of €611 million, increased by €103 million from 2007, representing 50% of total contribution from operations. In particular, this increase reflected higher levels of activity in Kazakhstan and North Africa.

Among the major orders acquired in 2008 were:

a contract for Nord Stream AG for laying the Nord Stream gas pipeline constituted by a twin natural gas pipeline that will link Russia and Germany across the Baltic Sea. Overall capacity of about 55 bcm/y will be reached when both the lines are operational;
an EPIC contract for Elf Petroleum Nigeria Limited (Total) for the construction and installation of underwater pipelines and related facilities connecting the Usain offshore oil field to an FPSO unit (Floating Production Storage Offloading);
a contract for OLT Offshore LNG Toscana for the FSRU (Floating, Storage and Regasification Unit) of the LNG terminal of Livorno through the conversion of a gas carrier ship moored offshore Tuscany into a floating, storage and regasification unit. The FSRU will have a storage capacity of 137 kcm of LNG and a production capacity of 3.75 bcm/y of natural gas.

Saipem is the only engineering and construction contractor that provides also offshore and onshore drilling services to oil companies. In the offshore drilling segment Saipem mainly operates in West Africa, North Sea, Mediterranean Sea and Middle East and boasts significant market positions in the most complex segments of deep and ultra-deep offshore, leveraging on the outstanding technical features of its drilling platforms and vessels, capable of drilling holes at a maximum depth of 9,200 meters.
In order to better meet industry demands, Saipem is finalizing an upgrading program of its drilling fleet providing it with state-of-art rigs to enhance its role as high quality player capable of operating also in complex and harsh environments.
In particular, over the next four years Saipem intends to build:

the Scarabeo 8 and 9, new generation semi-submersible platforms , to be employed in drilling operations in the deep-water of the Barents Sea and in the Gulf of Mexico, respectively, initially for Eni;
the Perro Negro 6 jack-up to conduct operations in shallow waters;
the new S12000 drilling ship to perform operations in West Africa for Total.

In parallel, significant investments are planned to keep up the production capacity of other fleet equipment (upgrade equipment to the characteristics of projects or to clients needs and purchase of support equipment).

In 2008, revenues were €472 million, accounting for 5% of total revenues. Contribution from operations amounted to €188 million, up €33 million compared to 2007. This increase was supported by higher activity levels of the Scarabeo 3 semi-submersible platform and the Perro Negro 2 jack up, as well as the beginning of activity of the Perro Negro 7 jack-up and higher tariffs.

The most significant contracts awarded during the period include:

a 5-year extension of the contract for the use of the Scarabeo 7 semi- submersible platform in West Africa for Eni;
a 2-year extension of the contract for the use of semi-submersible platform Scarabeo 3 in Nigeria for Addax Petroleum;
a 12-month contract's extension for the use of the Scarabeo 6 semi-submersible platform in Egypt for Burullus Gas Co.