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Italian engineering giant Saipem sues CNRL for unpaid bills at Horizon

Italian engineering giant Saipem sues CNRL for unpaid bills at Horizon

The Globe and Mail is reporting that Canadian Natural Resources (CNRL) is being sued by Italian engineering firm Saipem for unpaid bills and early termination of a contract related to the Horizon upgrader.

Saipem signed a lump-sum contract worth $480 million for construction of a hydrotreater at Horizon's Phase 2B expansion. The hydrotreater was said to be a carbon-copy of the original unit built for the initial Horizon development, therefore requiring minimal engineering.

Under the terms of the contract, construction of the hydrotreater was supposed to be completed by July 2015. The engineering firm alleges CNRL had demanded numerous changes, which added costs and pushed construction completion to April 2016.

Saipem claims that CNRL initially accepted the revised schedule, but later filed a formal notice to the engineering firm claiming it had breached its contract agreement. 

Saipem maintains the delays were the fault of CNRL and that perhaps the contract cancellation had more to do with plummeting oil prices, which had fallen from US$100 to just US$57 a barrel by the time the cancellation notice was served in December 2014.

Saipem apparently billed CNRL $370.7 million but the actual expenses were $509.2 million. The lawsuit points to numerous added costs incurred by the engineering firm, which were not covered under contract. Saipem is seeking to recover at least $213 million in unpaid bills.

CNRL did not comment on the matter and has yet to file a plea.

Horizon's Phase 2B expansion is due for completion by the end of this year and will add another 45,000 bbl/day of capacity to the overall facility.

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