Saipem (SAPMF) Faces NOPSEMA Warning Over Safety Violations

Zacks Equity Research
·3-min read

Saipem SAPMF, an Italian oilfield services company, received a warning from the Australian regulatory body National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), owing to safety breaches that could materially impact the health of workers onboard. The safety breaches were reported during welding operations on the pipelay vessel Castorone, which has been deployed at the site of Scarborough gas project, being developed by Woodside Energy.

According to an unknown NOPSEMA official, Saipem Australia had violated a listed occupational health and safety law. The fumes released during welding operations contain hazardous chemicals and ultraviolet radiations that may cause significant and irreversible damage to the workforce.

The first line of defense from the welding fumes and gases should have been engineering controls. However, instead of implementing engineering controls, Saipem had been relying on lower-order controls, such as the use of personal protective equipment, to protect its workforce against health hazards, the NOPSEMA official stated.

The company’s industrial hygiene documentation clearly states that local exhaust ventilation controls should capture the contaminants at the source. However, the existing extraction system plugged at the welding stations above the firing line is not efficient in containing welding fumes. In fact, the prefabrication welding lines lack an extraction system entirely.

In conclusion, Saipem’s engineering control measures at its welding stations are not aligned with the safety protocols, causing potential safety hazards for the workforce.

In response to the allegations, Saipem has stated that it will comply with the regulations. The company has been told to monitor the level of air contaminants in the welding stations as well as in other areas where welding fumes are produced. It must also deploy local exhaust ventilation engineering controls, which ensure the extraction of welding fumes at the source of generation. Alternatively, other control measures are to be implemented to bring down exposure levels to "as low as reasonably practicable."

In January this year, pipeline installation activities on Woodside’s Scarborough gas project were halted owing to a software anomaly. Saipem said that it was investigating the cause of the problem and had already started the remediation work. Although the anomaly did not cause any damage to the vessel itself, a major delay in the project might have led to the postponement of its first gas delivery target. However, the pipe-laying operation resumed on Feb 13, 2024.

Zacks Rank and Other Key Picks

Currently, SAPMF carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the energy sector are Archrock Inc. AROC, Hess Midstream Partners LP HESM and Sunoco LP SUN.Archrock presently sports a Zacks Rank #1 (Strong Buy), while Hess Midstream and Sunoco carry a Zacks Rank of #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

Hess Midstream owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess Corporation and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.

Sunoco LP is one of the largest distributors of motor fuel in the United States. The partnership distributes fuel to independent dealers, commercial customers, convenience stores as well as distributors. Its current distribution yield is greater than that of the composite stocks in the industry, providing unitholders with consistent returns.

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Sunoco LP (SUN) : Free Stock Analysis Report

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