Italian oil and gas contractor Saipem is planning to appeal an Algerian fine for allegedly inflating the price of contracts to build a gas pipeline.

On 2 February the Court of Algiers passed a sentence in relation to the bid procedure that saw a contract worth $1.36bn awarded to the company.

It ordered Saipem Contracting Algerie to pay a fine worth €34,000 ($37,000) for allegedly “inflating prices on contracts awarded by a public company engaged in industrial and commercial activities, taking advantage of the authority or influence of representatives of said company”.

In a statement released on the same day Saipem said it believed no inflation above market rates occurred.

Saipem said it planned to assess the reasons given by the court and appeal to the Court of Cassation.

The disputes centres around a contract known as GK3, one of the packages of the $6.27bn Midstream Pipeline Network project.

The GK3 package scope included:

• Construction of a 275 kilometre pipeline from Hassi R’Mel oil and gas gathering complex to Chaiba
• Construction of a 160 pipeline from Chaiba to Mechantine in the northeast of the country
• Construction of a 261 kilometre road between Mechantine and El-Kala
• Installation of a major gas compression station at Chaiba
• Compressor station at Mechtatine for the 48-inch gas pipeline at Hassi R’Mel, Skikda

The project package was completed in December 2011.

The ruling against Saipem comes at a difficult time for the company.

It has suffered from a decline in orders as oil companies cut spending due to the slump in global oil prices.

On 2 February the court also agreed to unfreeze Saipem bank accounts in Algeria. Saipem bank accounts holding funds worth around €83m have been frozen in Algeria since 2010.

Saipem is involved in a range of legal disputes in Algeria.

These include allegations that it paid officials €197m to win contracts worth €8bn from the Algerian state oil company Sonatrach.