CALGARY - Saturday, March 14, 2009
Despite a major slowdown in oil-sands spending, one of the world's largest oil and gas contractors is ramping up its Canadian operations in Calgary.
Saipem Canada Inc., an engineering division of Milan-based Saipem SpA, is setting up a major engineering centre in Canada and has launched a recruitment drive. Saipem is 43 per cent owned by Italy's Eni SpA, Europe's fifth-biggest integrated oil and gas firm by market value.
The push comes at a time when several energy firms are delaying or shelving major projects amid tumbling oil and gas prices and dwindling access to credit.
Piero Cicalese, chief executive of Saipem Canada inc., said the downturn will allow companies to rethink their strategy on large projects, which he expects will start up again quickly when prices improve.
Developers want to avoid a repeat of the past, when more than $100 billion of planned oilsands investment stretched Alberta's labour supply thin and led to multibillion-dollar cost overruns and delays, he said.
"You saw what happened here on the projects, they start with one cost and finish with a completely different number," Cicalese said in an inter-view with the Herald on Friday.
"In the labour market, we had the crazy, crazy salaries here -- that is not sustainable."
He suggested that more projects may favour "lump-sum" contracts, which Saipem Canada Inc. works under, rather than the traditional "cost-plus" approach.
"In a changing situation, it can be attractive to a lot of oil companies the fact that there is a company willing to share the risk and be capable of managing the risk," he said.
Saipem Canada Inc. entered the Canadian market in 2005, after winning a contract with SNC Lavalin to build hydrotreaters for the Horizon oilsands project, owned by Canadian Natural Resources Ltd.
That $9.7-billion project, which produced its first synthetic crude last month, cost over 40 per cent more than initial estimates.
In September, Saipem Canada Inc. moved to bigger offices, where it currently employs about 120 people, about 10 per cent of whom are Italian expats.
The firm is planning a job fair in Calgary later this month, but Cicalese declined to say exactly how many positions are on offer.
"We want to grow, but we want to grow with the right people," he said.
Cicalese said the planned expansion of the Canadian engineering division is not a sign of growing interest by its parent company to become an oil-sands producer. As a unit of Saipem, the engineering firm is far removed from those discussions, he said.
Eni is one of the few global oil and gas firms without a stake in Alberta's oilsands. But Eni's chief executive now says the company's enthusiasm for the Canadian oilsands sector is waning, citing high costs and environmental concerns.
"While a year ago, we would have told you that we are looking deeply into it, now we are somewhat cooling off," Paolo Scaroni said last month.
Written by: Lisa Schmidt,
, © The Calgary Herald 2009