Saipem SA and its Brazilian subsidiary, Saipem do Brasil, have regained the ability to fully engage with Brazil’s public sector following a decisive ruling by the Federal District Court of Brasilia. The court annulled a prohibitory sanction previously imposed by the Controladoria-Geral da União (CGU), which had restricted the companies from contracting with state-owned entities for a two-year period. This decision, issued on December 20, 2024, is effective immediately, allowing Saipem to resume its operations in the Brazilian market.

The origins of the sanctions date back to 2019 when the CGU launched an administrative accountability process (PAR) against Saipem. The investigation stemmed from allegations of irregularities tied to a 2011 contract for the installation of a submarine gas pipeline connecting the Lula and Cernambi oil fields in the Santos Basin, awarded to Saipem as part of the BM-S-11 consortium. The project was scrutinized under the broader scope of Operation Lava Jato, the extensive corruption probe into Petrobras, Brazil’s state-run oil giant.

Saipem and Saipem do Brasil were accused of involvement in improper conduct during the execution of the pipeline contract. The investigation led to the conviction of one of Saipem’s representatives in Brazil, as well as a former Petrobras director. In response to these allegations, the CGU imposed an interim ban in December 2022, prohibiting the companies from participating in contracts with the Brazilian government.

In January 2024, the CGU’s final ruling on the case substituted the initial ban with a two-year suspension, a decision that Saipem deemed unjust and disproportionate. The company appealed the ruling, asserting that the sanctions did not align with the evidence presented during the investigation, and that the decision was inconsistent with the legal framework of the case.

Saipem’s legal team mounted a successful challenge in the Federal Court, arguing that the CGU’s sanctions lacked sufficient legal and factual basis. On the back of this ruling, the Federal Court annulled the sanctions, effectively restoring Saipem’s right to contract with public entities in Brazil. This ruling comes at a pivotal moment for Saipem, as the company continues to secure new contracts in the global energy sector, including a recent offshore assignment with Shell in Nigeria and the completion of an export trunkline project in Australia.

The Federal Court’s decision is a significant legal victory for Saipem, not only restoring its access to Brazil’s lucrative energy market but also sending a broader message about the scrutiny and fairness of administrative sanctions in Brazil. With this ruling, Saipem is now positioned to re-enter the competitive Brazilian market and pursue new opportunities with state-owned companies, which are key players in the country’s energy infrastructure.

The annulment of the sanctions also marks a turning point for Saipem’s long-term business prospects in Brazil, a country with a dynamic energy sector that has traditionally been vital to the company’s strategic goals. As Saipem seeks to regain its standing, this ruling provides the foundation for future engagement with Petrobras and other state-run entities.