Italy-based pipe-laying company Saipem has filed a €759m ($823m) arbitration claim against Russian company Gazprom for cancelling a contract to lay a natural-gas pipeline under the Black Sea.
The company initially filed the claim against Gazprom’s subsidiary South Stream Transport before the International Chamber of Commerce in Paris in November 2015, with documents outlining this released last month.
In 2014, plans to build the South Stream link to Bulgaria were scrapped by Russian President Vladimir Putin as the EU opposed the project.
An alternative route to Turkey, known as the Turkish Stream, was proposed and cancelled in 2015 after the two countries took opposing positions in the Syrian conflict. Relations soured further after Turkey was accused of shooting down a Russian military aircraft.
Saipem secured two contracts valued €2.4bn to work on the South Stream pipeline project.
A €2bn agreement was later transferred to the Turkish Stream pipeline and then cancelled by Gazprom.
During the past three years, Gazprom reportedly invested around $20bn in the project, including on expanding gas network in Russia in order to feed the link.
South Stream is Gazprom’s global infrastructure project aimed at constructing a gas pipeline with a capacity of 63 billion cubic metres across the Black Sea to Southern and Central Europe.
The first gas was initially expected to be supplied through South Stream in late-2015 with full capacity scheduled for 2018.
Construction on the South Stream gas pipeline started near Anapa in December 2012 in the Krasnodar Territory.
Image: Saipem 7000 pipe-laying vessel. Photo: courtesy of Gazprom.