MILAN, April 28 (Reuters) - Saipem has teamed up with Italy’s state railways to bid for work on a Russian high-speed train project as the Italian oil engineering and contracting firm seeks new business to offset an ongoing slump in the energy industry.
Oil service groups like Saipem have been hit by a sharp fall in oil prices since mid-2014 that has led energy majors to cut billions of dollars in costs and delay investments.
Oil and gas exploration and development firms spent just 400 billion euros ($436 billion) on projects last year compared to 700 billion euros in 2014, according to Saipem CEO Stefano Cao.
“We’ve signed a memo of understanding with Ferrovie dello Stato (Italy railways) to make a joint bid for a part of the Moscow-Kazan project,” Cao told shareholders at a meeting on Friday.
The Moscow–Kazan project, first proposed in 2009, is a 770-km (480-mile) high-speed rail link between the two Russian cities.
If the bid with Ferrovie was successful, the work could be worth a total of about $3 billion, Cao said.
To offset the slump in the oil and gas sector, Saipem has said it plans to grow business lines in areas like engineering, renewable energy and energy platform dismantling.
But Cao said no talks with the Russians were underway yet about the rail project and he did not expect the work to be booked in the company’s backlog in the short term.
Italy’s state railways, which has plans to list on the Milan market, is looking to expand its business abroad.
It has operations in Germany and Greece and is looking to bid in tenders in the Britain.
$1 = 0.9177 euros Reporting by Stephen Jewkes; Editing by Edmund Blair