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2026.10.07 | TB | Energy | Saipem Middle East Offshore Backlog

原标题：Saipem – Offshore E&C Activity in the Middle East & Order Backlog Development

#energy #industrials

Third Bridge · 2026-10-07

Analyst-led • 18 Sep 2026

Companies: SPM IT, 2222 SA

Lorenzo D'Agostino (LD) Head, Commissioning at Progetti Europa & Global SpA

Olly Anibaba (OA) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

OA [00:00:05]: Welcome to Third Bridge's Interview entitled Saipem – Offshore E&C Activity in The Middle East & Order Backlog Development. I am Olly Anibaba, and I'll be moderating today's Interview with Lorenzo D'Agostino, former Department Head, O&M, operations and maintenance and Commissioning and Offshore Fixed Platforms, Abu Dhabi at Saipem.

Before we start today's Interview, please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

LD [00:00:42]: I agree.

OA [00:00:43]: Thank you. Could you please start with a brief introduction to your background?

LD [00:00:52]: Good evening, all. My name is Lorenzo D'Agostino. I'm a former Head of Commissioning for Saipem in the Middle East. Before leaving Saipem, I was leading all the offshore platform commissioning activities in terms of commissioning engineering and execution across Middle East and other areas for Saipem. I left Saipem around February of 2025. Since then, I've been working as Commissioning Manager and the Head of Department for commissioning for PAG DMCC, which is another EPC contractor based in Dubai.

Questions

00:01:40] Saipem's H1 2026 earnings report highlighted solid project execution in the Middle East. What are the key project execution risks that should be considered for the company's Comp 2, Comp 3 and Comp 5 EPC [engineering, procurement and construction] packages under the Qatar NFPS [North Field Production Sustainability] expansion?

LD [00:01:58]: Compression 2, compression 3 and compression 5 are projects for QatarEnergy in the same field, especially compression 2, I was part of that. I was leading the commissioning for that, and it's a very complex offshore platform. It's the biggest platform that Saipem has built ever in terms of tonnage. To do that, they have to split the topside in two pieces for the two main compression platforms. That was the only way they could do basically a lift from the fabrication yard in Karimun. By breaking this into two pieces, they had to basically cut most of the systems. This has introduced an extra level of complexity to the system. As you know, most probably Saipem and other EPC contractors are trying to maximise the job that can be done in yard in terms of construction, but also commissioning. Most of the time, this job is never happening as planned because there are delays and there are issues, which normally happen in an engineering project. For this case, compression 2 and compression 5, which are very similar projects, the fact that they have to break it into two pieces will reduce significantly the amount of work that can be done in yard because, for example, all the commissioning activities, which are very critical because we will arrive at basically what is working and what is not working, it cannot be done at site in yard.

Normally, you can achieve 60-70% of the commissioning activity at yard. In this case, by breaking the topside in two pieces, you are going to reduce drastically this amount of work. What is going to happen is that they will have to hook up two pieces of the platform offshore. This is going to hide most of the issue, technical issue until you are already at site in offshore. Of course, whatever you find out that this faulty, it has to be replaced, is going to be found very late. It will involve not bulk procurement, but specific procurement, which most of the time have a long lead time. I'm talking about cards, electronics, most of the time, those things that used to fail a lot. This is one of the major problems. Basically, you will have a carryover work much higher than expected in normal projects. There is always carryover because, of course, there is a priority in the heavy-lift vessel schedule, but this is going to impact much more. This is one issue that I see. Another issue, it's going to be with the integration of those platform because compression 2, compression 3 and compression 5, they are platforms that are going into an existing network of platforms, NFPS. Especially QatarEnergy is a client that is very careful of what you're doing in their brownfield.

There is a lot of requirement in terms of safety, in terms of how you can access their running facilities. Those have to be heavily integrated into the existing facility, especially on the control system, basically the brain of the plant. It's going to be very, very tough to respect the schedule because you are basically depending on weather, you are depending on whether the client agrees to let you touch the system. There is always a big gap between the operator side of the client and the project side of the client. There is always a lot of misunderstanding, a lot of things that you find at the last time. When you do hookup on a brownfield, most of the time, the schedule drags significantly. For example, in EPCOL, which was the first project of the family in FPS, there was like over 1.5-year delay on the schedule because of those things.

00:06:52] You mentioned that the compression 2 and the compression 5 projects are quite similar. What operational or technical lessons have been learned from the compression 2 project that could be applied to compression 5? How might that help with accelerating the execution timeline?

LD [00:07:10]: Because now I'm out since sometime this year, but if I'm not wrong, they are still in fabrication phase for compression 2 or maybe they are about to sailaway. Anyhow, basically, the most critical part, which you're going to learn is going to be offshore because the fabrication phase, okay, you will have challenge because of the splitting of the topsides. Yes, they will be able to accelerate, but the most critical part is going to be offshore because a lot of activities have to happen in parallel in several platforms because of the integration I was mentioning about. You have to have deployment of several vessels in several platforms at the same time in order to do this integration. I believe this during the bidding phase and as well as during the early project award phase was not studied enough. Most probably they will realise later that they need more vessels, they need more people. There is much more time for the integration. It's like a loop. It's like a ring among the platform, which is very, very complex. Even client is not very familiar with all the technical implications on this. It's integrating and this kind of platform in an existing network was never done in NFPS.

00:08:46] What strategies can Saipem employ to coordinate offshore heavy-lift installations and hook-up activities to avoid delivery delays across concurrent project timelines?

LD [00:08:56]: In the organisation, there is a project management team dedicated for each project. What they need to do is basically let all the project management team of each project work together and treat it as a single project, single major project in order to share the vessels, manpower and to have a common schedule because otherwise… This has to be done in a very high level of detail. They have to go very deep into the detail, clarify with client early enough what are the expectations, what are the actual jobs and they have to develop a very fine sequence to make sure there is no overlap because those projects are happening in parallel, but the integration is not going to happen in parallel because of the vessel shortage. They need really to treat it as a single project, go very high into the detail and very deep into the detail and develop a single schedule to manage vessel, people.

Some of this activity also requires very high level of expertise, and they have maybe one person that can do some of these jobs. Also, there are vendor-specialised, which they are not available whenever you want. You have to plan very well in advance for this. To me, you have to treat it as a single major project. Because, for example, the person that is going to do the software work is most probably the same. You need to book those kinds of people for a long time, make sure that no other contractor takes them and treat it as a single major project. That will be my advice.

00:11:14] In terms of the skilled engineers required, do you see a shortage of labour force in the medium term as a risk for Saipem?

LD [00:11:26]: Yes. This has been a recurring issue over the past year as well. You have a limitation of accommodation offshore. What they are doing most of the time, they are using a jack-up barge, which has a limited number of personnel that you can accommodate. Sometimes they back it up with work vessel, but those are 20-24 pax maximum. While the jack-up barges we are using, they are 300 pax, 250-300 pax. What is happening, most of the time, there's a shortage of accommodation. Then the amount of people they are having for sure, is not enough. They try to cut on manpower to maintain margin, but this always backfires. Then also those guys, there is a high rotation. There is a high turnover because conditions are not good offshore. People try to run away, especially in this period where the oil and gas salaries are quite high. They're looking for other opportunities. They don't want to stay three months offshore in a row, the way it has been happening there. I'm expecting a turnover. I'm expecting that they will not have enough people. It has been that way all the time. That is a risk for sure. Of course, if the escalation in the region again increases, that is going to make difficult travelling as well.

OA [00:13:18]: What could Saipem do to retain its staff, whether that's offering wage increases or something else?

LD [00:13:30]: Basically, complaint have been most of the time into the rotation, like I was saying. They need really to clarify and try to accommodate better rotation of people. If they can basically accommodate the fact that a visa is granted to them even if they work offshore, that will be also a good card to keep them.

00:14:44] Regarding the compression 5 package, how are complex weight profiles impacting yard utilisation?

LD [00:14:52]: It's very heavy tonnage for the yard. I'm expecting over there as well, there is a limited amount of people, limited amount of space that the yard can accommodate. Also, there are some critical activities like mechanical completion where you have skilled personnel, which are difficult to find into the market. Those most of the time are working on parallel platform, parallel projects. If you push a lot of projects, a lot of platform in the same yard, you have a limit, of course, in terms of how many people that can work in parallel, but you have a limit of area. There is a clearance in terms of cranes. There is a clearance in terms of safety regulations when you're doing a critical job like leak test or whatever test where you have a minimum distance to be granted. This again, is limiting the space in the yard. Like I was saying, there are issues where you are going with very specialised personnel, construction manager, assistant completion manager, commissioning lead, commissioning managers. Those guys, most of the time are following more than one platform. Of course, they are not going to perform well if the workload is much.

00:16:28] What schedule contingency can be baked in for Saipem's primary installation assets, such as the De He heavy-lift vessel?

LD [00:16:39]: What they will normally do is that since the De He or other heavy-lifting vessels are basically booked very much in advance, they cannot afford any downtime or any delay because it's going to have a knockout effect on the other projects. What they normally do, they have to keep doing the same thing they are doing, maintain the vessel schedule intact as it is now, of course, in coordination with all the other projects, but this will have a downside of a lot of carryover work, what I was saying before. There was a study, which I was part of in the past. I don't know if it's still happening. We were trying to see with some temporaries like temporary cable, temporary piping and with some smart breaking of the system to be able to perform as much as job as we could in the yard to avoid major carryover. By doing that, you are basically maintaining the schedule of the vessel, but you are accelerating what you can do in yard where you have equipment, you have unlimited resources, let me say, compared to offshore.

By modifying the design slightly to make it more easy to be commissioned and to be started, you can achieve a bigger percentage of progress in the yard by maintaining the sail-away date. There will be, say, quickly answering this question, you have to work on the design, do a study where you can basically optimise your job by adding a few items here and there, so you can progress faster in the yard and then having something in a better shape at your sailaway date. This will drop significantly the job offshore, which is where there is the major delay, where there is a major loss of time because you are limited on everything.

00:19:06] What could be the potential improvement in Saipem's fabrication throughput levels at regional yards when it comes to adjusting offshore vessel design and reducing components?

LD [00:19:21]: My view on this is, again, they have to tweak the design. Now they did this choice of breaking the topside in two pieces. It doesn't mean that you cannot proceed to work on the platform like it's a single one. You need to interconnect it with some temporaries and proceed with the job like you would do if it was a single piece. This will help you to optimise all the testing, all the troubleshooting that you need to do in yard instead of shifting it to basically offshore. Going with some temporary cable, temporary piping, do temporary hook-up on yard. By doing that, you can test. You can improve the testing and verification much further. You can achieve much better amount of progress. Also, for example, those turbines were initially thought to be using only single fuel. My advice at that time was that they could purchase a modification kit because the major item, the major risk here is on the compressor on the turbine, on the compressors. The major equipment until you run them, you don't know what are the issues. What you can do without having a fuel gas, without having gas on the yard to run them, you can convert them temporarily. This is going to cost USD 200,000-250,000 each machine, but it will help you to convert them and run them in diesel. If you run them in diesel in yard with a temporary conversion, you can test everything.

You can make sure there is no fault, there are no issues. There is not something that when you drag it offshore, it's too late and it's going to ruin your critical path. On the yard itself, it's just a matter to basically study the layout with all these platforms, make sure the constructability is done at a multi-project level. Your crane positioning has to work not only considering one platform, but considering the platform of compression 2, the platform of compression 3 in parallel, an overall layout of the yard. You must make sure you have access, you must make sure you have a way to bring your equipment, your manpower, not only considering a single platform like it has been happening. Each project is thinking on its own. They have to think the yard as a single entity. Spacing and accessibility should be thought looking at all platforms that they have in that moment placed order.

00:22:51] Given everything we've discussed, what is your projected completion timeline for the NFPS campaigns in Qatar? How do project schedules compare between subsea pipeline installations and major structural developments?

LD [00:23:06]: Now I do not remember exactly what is their timeline, but normally, I will tell you that from the declared execution timeline when a project is awarded, in terms of ready for start-up, what I've seen with NFPS, it has been 12-16-month delay from the original plan. This has been because of what I was telling you earlier, it's very difficult to predict all the requirements of client. They are very tight, not from a project perspective, but from an operational perspective because, of course, NFPS is their major source of income. They don't want to take any risk in shutdown. If you touch something that you should not touch and you're going to affect their production. They're very tight in allowing you to do your work. There is a lot of pushback, especially there's a lot of documentation required whenever you want to integrate. This is going to be the major source of delay. They need really to study deeply the integration on those platforms.

OA [00:24:42]: How do the project schedules compare?

LD [00:24:51]: Basically, for the jacket installation for the structural part, normally, I don't see a major problem as far as they can keep the fabrication going. Basically, pipeline, there is always a way to isolate. If I remember well, the design, they have thought about the expansion part. There will be maybe very few tie-in, which require a partial shutdown, but the network is well-designed, so they can deviate the production quite easily. On the pipeline and on the jacket perspective, I don't see there's going to be a major delay. Also in the past in NFPS, more or less, they were able to maintain the schedule on this jacket installation. For the structural part and the pipeline part, I'm not too much worried. What worries me is, again, the integration of the living quarter. They have two living quarters in compression 2 and compression platform. Those basically are installation that to make them work, you have basically to integrate those into the existing control system. It's like a brain surgery. They need to wire the control system. Basically, there is a transfer of control. This compression platform will have to be controlled by an existing platform, which is already running for 20 years. The software there is not basically designed with this compression platform in mind. They will have to modify the software. They will have to run all the cables, they will have to run all the piping. It's a major, major intrusive job.

There, I'm expecting for sure, there's going to be delay. On the topside, mostly. Even the accommodation platform, it looks simple on paper because it's just a living quarter, there are just rooms, but because of the interconnection with the fire and gas system, there is fire and gas detection for each room to make sure that in case of fire, people know that and they can escape. This is integrated into the fire and gas system of the plant. Again, we are talking about brain surgery. Even those two platforms, which look simple at the end of the story, they have a major interface problem with the existing plant. Then another major point is the telecommunication because QatarEnergy, it's very, very strict on the requirement of having CCTV control view from onshore of all the platform. They want to be able to remotely control whatever it's as per design. It's a normal condition, any other plant, they would allow you to operate locally with people offshore while you are receiving the production from onshore and they would have allowed you to run like that. QatarEnergy, they don't allow this. Whatever, like telecommunication, like CCTV or satellite communication, whatever means of communication are into the design, they want to make sure they are up and working.

I can tell you in NFPS, EPCOL, so was the first of the series of the NFPS development projects. They did not allow Saipem to start because of the hotline telephone. Even for this, because it's considered a safety point, even hotline telephone was a blocking point to start. Basically for Saipem to finish the project and for QatarEnergy to start production and of course, it's driving the milestone of the FSU. This kind of system like telephone are integrated with third party in Ras Laffan, which have, again, their own security concern in terms of cybersecurity. They have a lot of requirements, which make the job extremely difficult. Again, we're talking about brownfield. We are talking about security, government networks, which you need to access and do modifications. Sometimes even during the bidding stage, you go there, they don't allow you to clearly even look at the system you have to integrate with. The design most of the time ends up being wrong because you didn't get enough information because there are things that are very restricted. You end up at the end of the project, you are ready to get your certificate of completion, but you cannot because it's missing a switch, it's missing something, some electronics, which you did not foresee or maybe the cabinet where you have to work doesn't have enough space for the system that you have designed. Those kind of things are definitely going to be there.

00:30:27] How would you evaluate Saipem's track record for completing offshore EPCI [Engineering, Procurement, Construction and Installation] projects within budget and on schedule across the Middle East, Mediterranean and West Africa? In which geographical location does the EPCI contractor have the weakest project execution reliability?

LD [00:30:47]: I have no experience because when I was leading the offshore commissioning department, basically, we were executing projects in the Middle East and just one in West Africa. We were only on the design phase of Neptune, which was in Black Sea. There was nothing in Europe going on at that time. I would say, let's say, in terms of Middle East, no schedule was respected. There was heavy delay on each and every project. Some projects, the one which are done in STAR yard, the one in Saudi in Dammam. Those projects are basically very similar one to another, the LTAs I'm referring to. In terms of fabrication, they are quite reliable. Of course, the declared schedule is never fully respected because it's more or less imposed by clients. As far as they want to go for the bid and get the award, they will accept whatever schedule is imposed. Then in terms of actually executing the job, let's say, what I was telling you in Saudi, there is slight delay on fabrication and most of the time, medium delay. I'm talking about 6-9 months on the offshore part. QatarEnergy, much worse, like I was saying, you can consider at least 1.5 years based on past experience because the client is very particular. They are very tight on all the things I was telling you before.

West Africa, the yard is not quite well equipped. I'm referring to Angola. The local supply of equipment, specialised equipment like compressor or spread for leak test, it's very difficult to obtain. I believe it was many years during which this yard was not doing platform, because of that, they lost some of the competencies there. They don't have enough equipment. They were not really skilled to perform the job in the proper way with the proper time. That yard is quite weak in terms of execution, but at that time, there was Quiluma project, which was, let's say, simple from a technical point of view. I don't think they had a very huge delay because of that, but if there is a major project which needs to be executed there, they really need to upgrade in terms of manpower skills and equipment to be able to have some limits on the delay. Otherwise, there's going to be a major, major delay there because that yard is not mature at the moment.

00:34:27] Which specific upcoming E&C [engineering and construction] tenders from Saudi Aramco, ADNOC [Abu Dhabi National Oil Company] and QatarEnergy could Saipem designate as priority targets over the next 12-24 months?

LD [00:34:44]: I believe, of course, Saudi Aramco, as there is an LTA going on. This is a long-term agreement. It's almost fixed revenue for them if they're going to get projects. Aramco is definitely the priority. Most of those platforms are wellhead platforms, so they do not require a very heavy-lifting vessels, so they are quite easy. There is an established yard in Dammam, which works basically only for Aramco. Those projects are very similar to each other. For sure, this is going to be their priority because it's a low risk and fixed revenue, I can say. ADNOC, there is a major project going on over there. I think it's something like USD 6bn. I don't think they are going to look for more exposure with ADNOC. Also ADNOC, it's even more demanding than QatarEnergy. I don't expect it to be a priority. They are very tight with the budget.

It's very difficult to get money out of those projects, but they're very large in general. There is a high risk, low margin, which is very different from Saudi Aramco. Saudi Aramco, there is another positive thing that commissioning of certain part is done by the client. You don't have major risk that the plant cannot work. Those are critical activities, which can impact you drastically, but they are out of the scope. QatarEnergy, since they are heavily invested with the office, with the spread in Ras Laffan, I believe they will continue to bid. If I can rank, I would say, (1) Aramco for sure, (2) QatarEnergy and (3) ADNOC.

OA [00:37:10]: In terms of Saipem's long-term agreements with Aramco, what portion of turnkey risk is governed by lump sum vs index-linked pricing?

LD [00:37:22]: I'm not sure about that. Actually, if I'm not wrong, those projects are fully lump sum with the exception of, I believe, the offshore campaign, which is going to be reimbursable, but I'm not sure about that.

00:37:44] How would you assess the level of competition to win new E&C contracts in the Middle East?

LD [00:37:52]: It's very high. Normally, whenever there is a project, there were around 6-7 bidders. Of course, when we are talking about LTA, long-term agreement, I believe there are three or four, which they are in this programme. It's much better, much easier to get an award. When it's a free bid out of Saudi Aramco, it's six, seven, sometimes 10 bidders bidding for the same project, so it's tough. What Saipem has on its own is that they and the similar heavy-lifting vessels are quite in the market. They have a lifting capability, they have yard capability. Of course, now with all these projects, the yard saturation is there. They have to go most probably with other yards if they want to keep getting projects. Let's say, because they have heavy-lifting vessel and they have yard capability, generally speaking, they have some kind of advantage for big projects, while for smaller projects, they are much less advantaged to get the award.

OA [00:39:19]: Could you elaborate as to why Saipem is in a less advantageous position to win the awards for smaller projects?

LD [00:39:25]: Yes. Normally, my experience is that except LTA, which can be USD 80m-100m. Normally, they don't go less than USD 300m-400m per project. Whatever is less than this value, they don't normally bid most probably because of the overhead, but also because they lose time because they cannot make margin on this very competitive, low-value projects.

00:40:12] How are pricing strategies and capacity constraints among key EPCI competitors impacting Saipem's target margins on new Middle East bids?

LD [00:40:23]: Yes, it's a heavy impact for sure. Basically, whenever you are bidding for these large projects, most of the time a client is asking for discount. If I remember well, on kind of project like EPCOL, over USD 3bn-3.2bn project, there was like a USD 200m discount. This is, of course, coming from a lot of pressure from the other contractor, which are bringing down the price. At that time, I think the strategy was to get into QatarEnergy world. The same approach most probably has been done for ADNOC. That award was basically to get into working with them. There was some heavy discount. They do this kind of approach just to start working with a new client or in a new area, new country. Of course, sometimes they seem to go in break-even by making huge discount and get the client. At the end of the story, most of the time, they don't make margin on those projects. I mean, they lose money on those projects. What they are looking at when pricing it is around 10-12% on offshore. That is the expectation, but of course, they can go break-even or slight margin whenever they want to attack a new market.

00:42:12] Given the downward pricing pressure, can regional tender pricing command high-single-digit to double-digit EBITDA margin generation?

LD [00:42:22]: Yes, in case your suppliers are… Because normally, the price is composed by, let's say, 10%, it's going to be engineering, 5% commissioning, 40%, it's going to be procurement. In this 40% of course, the basic price, your cost price where you're applying the margin. On this 40%, you can get a good discount in terms of material supply, that is definitely going to inflate your margin. We're talking about 40% of the cost in material only. Then another 40%, it's going to be construction cost.

00:43:12] What are the projected EPCI contract margin trends for newly tendered Middle East offshore developments when bidding independently compared to partnering in JV with Asian shipyards?

LD [00:43:27]: I don't have this information, honestly.

OA [00:43:32]: Do you have any thoughts on how big the disparity could be?

LD [00:43:55]: I will definitely say you can save easily 20% on your fabrication cost if you go in China, I would say 20-25% of the construction cost can be saved by going in China. Of course, then you have the transportation cost. On purely fabrication cost, you can cut, I would say, 20-25% at least.

00:44:27] To what extent are regional geopolitical tensions or transit disruptions in key maritime choke points affecting Saipem's project milestones and material or component deliveries?

LD [00:44:42]: I would say heavy disruption. Here, we need to make two distinctions, one is material. Of course, whatever is big, so like main equipment, I would say, if we were referring to compression 2, compression 3, compression 5. If you are having main equipment delivery, it's going to be very tough to go, of course, by sea. This is going to be a problem, but there are also major problems with the supply of bulk material, light stuff because normally, they come in bulk, not only for you, there is a distributor and this distributor is buying containers, which again, they're coming by sea. Even in all light material, you're having a major disruption. Another major disruption that nobody really see is when you are dealing with vendors. If you deal with vendor, specialised people, let me give you an example. If the compressor manufacturer, like in this case, I don't remember in this case, Solar Turbines, yes. If Solar Turbines has to come to start the plant, it has to mobilise his site representative, which most of the time is not authorised to travel during this kind of escalation.

This is going to completely give you the schedule because only authorised manufacturer vendor personnel can start up and commission the major equipment. It's not only a matter of material, but it's also a matter of specialised personnel that are not authorised to travel in the region yet. There, sometimes they solve it by doing remote assistance. They do this kind of interface. They can connect remotely with laptop and try to do something, but most of the time, it's much more slow and it's very, very difficult. Most of the time, this can be a stopping point. If you need the specialised personnel and they cannot travel, it's going to ruin your schedule. Here, we are talking about offshore campaign because normally, it's the last part of the integration where you need those people.

00:47:28] How are the ongoing transit disruptions and extended shipping routes impacting lead times and logistics expenses for long-lead specialised equipment, corrosion-resistant alloy piping and subsea cables?

LD [00:47:43]: I don't have the exact figure for all the items, but for some of the containers, I've seen the price per container has gone 4x in the region. Of course, let's say, this is a price for shipment. In terms of manufacturing cost, it really depends, I believe, on the market demand because most of these, let's say, piping material, special alloys, most of those items are fabricated in China. Most of those purchases happen in China, mostly for the piping material. They are far from the conflict. I don't see major disruption, but of course, the major disruption is on the shipment.

00:48:34] Depending on how long the Middle East conflict and associated transit bottlenecks persist, do you anticipate potential project cancellations or suspensions under force majeure provisions?

LD [00:48:47]: Yes, it really depends on the country. For example, QatarEnergy, of course, is living out of Ras Laffan exporting. There was a major halting to the production because of the bombing. This is really critical for their infrastructure, for their revenue. I believe they will give all their budget now to make sure all the LNG trains are back to production. They will also try to award something to be able to export in a different way, maybe passing through west. I would say, in terms of offshore development, if Ras Laffan doesn't come back to the original production rate capacity because there was 60-70% reduction in output because of the bombing. I understood from guys that there is going to be a five-year job to go back to original production. Of course, if Ras Laffan cannot take all the produced gas from the new development offshore, most probably they will delay or I don't think NFPS is going to cancel any of those compression projects, but most probably, they will delay because there is no point to me to keep building offshore if Ras Laffan cannot take this production. Of course, you don't want a plant that is in shutdown, is built, ready, handed over from your contractor and is getting old offshore because whenever they don't operate those plants, they run into major issue, they try to preserve as much as they can, but not running those plants is very detrimental.

If I was there, I wouldn't issue new award, get a plant that I cannot run because it's going to get spoiled by the time I need it. I will most probably postpone it. The same, I believe, is applicable to Saudi, to Aramco. There, you have a pipeline which has been also attacked. Saudi is mostly living out of crude, not gas. Let's say, transportation problem, it's somehow manageable maybe to a certain extent by truck, but of course, it's going to be a major, major reduction in output. Again, for the same reason, I would put on hold all those platform projects.

00:52:00] Based on Saipem's H1 2026 earnings, the Middle East disruption generated extra costs of EUR 70m. To what degree do the company's existing EPCI contracts with Saudi Aramco and QatarEnergy provide formal cost escalation or pass-through clauses to absorb freight spikes and raw material price volatility?

LD [00:52:23]: I would say normally, they try to not cover those costs because, of course, you are an EPC contractor, it's your risk. There is some contingency during the bidding phase that you take into consideration. You basically account for escalation, you account for some hikes in the price, some hikes in the exchange rates. Those are your contingency as a contractor. Your client normally doesn't cover those expenses unless there is a favour in this sense. Basically, you maybe agree on some extra jobs to try to obtain some kind of cover for those disruption. It's never money for free. There is always some kind of requirements on their side, which is again work, extra work, things that were not part of the original scope, which you have to do before you basically recover part of this. Then I would say, if you want to have a figure, I would say maybe they can get back 10-15% of this. I'm not expecting more than that. On top of this, there is normally a claim approach. Whatever the contract doesn't cover and you are suffering as a cost, but it can be attributed to clients, for example, inefficiencies because they will not let you work, like I was saying before, on brownfield, they will give you some kind of delays because of the criticalities of the system. This can be used against them to claim some money.

What I see here is basically most of the time, if you have this kind of war situation or disruption, which are more geopolitical, they will maybe let you get some of those claims to cover partially those costs, but again, it's not something that is due. It's not something that it's contractually part of client to cover. It's a risk on the EPC contract most of the time. If things go very bad in terms of escalation, QatarEnergy will definitely apply force majeure because it's a client that used to do that. Saudi Aramco will be less likely to do that. I don't have much experience on ADNOC, but definitely, QatarEnergy for this kind of situation, they will ask for force majeure. They will impose force majeure and let you stop the job if there is heavy escalation.

OA [00:56:43]: In order to preserve a cash conversion ratio greater than one, what measures could Saipem implement to safeguard potential client retention?

LD [00:57:07]: No, I would say I cannot help you on this. It's not really something that I was involved in.

OA [00:57:18]: Are you confident in Saipem's ability to sustain a strong cash conversion ratio greater than one for its Middle East operations over the short-to-medium term?

LD [00:57:33]: I'm not really familiar with this cash conversion ratio that you are referring to.

OA [00:57:43]: Is there anything else you want to discuss about Saipem or its Middle East operations?

LD [00:57:57]: Not really. If you have any further questions, I'm happy to answer and nothing from my side.

OA [00:58:03]: That's a good place to end today's Interview. Thank you so much for your time.

LD [00:58:14]: It was my pleasure. Thank you so much.

Transcription ends at 00:58:19 of the recorded material