SELCE Model

The Saipem Externalities Local Content Evaluation (SELCE) Model is an innovative way to calculate the comprehensive footprint of Saipem's operations on local economies and societies. Traditional methods evaluate Local Content by calculating only the direct components of the overall impact. The SELCE Model, on the other hand, quantifies the positive effects of Saipem's activities by calculating the direct, indirect and induced effects of operations.

Algeria (2010)
Economic impact: 2 213 mln USD
Employment: 53 456 jobs
HCD: 1.00 mld USD
GDP: 1.3%

Angola (2011)
Economic impact: 472 mln USD
Employment: 10 230 jobs
HCD: 25.4 mld USD
GDP: 0.34%

Australia GNLG Project (2011-2014)
Economic impact: 2 378 mln AUD
Employment: 7 946 jobs
HCD: 21.9 mld AUD
GDP: 0.04-0.07%

France (2011)
Economic impact: 2 825 mln USD
Employment: 11 241 jobs
HCD: 19.6 mld USD
GDP: 0.06%

Indonesia (2011-2012)
Economic impact: 453 mln USD
Employment: 12 874 jobs
HCD: 15.20 mld USD
GDP: 0.02%

Kazakhstan (2010)
Economic impact: 465 mln USD
Employment: 7 891 jobs
HCD: 13.1 mld USD
GDP: 0.34%

Nigeria (2011-2012)
Economic impact: 2 065 mln USD
Employment: 22 973 jobs
HCD: 4.62 mld USD
GDP: 0.3-0.4%

Peru (2009)
Economic impact: 88 mln USD
Employment: 2 777 jobs
HCD: 4.5 mld USD
GDP: 0.05%

Saudi Arabia (2011-2013)
Economic impact: 7 000 mln SAR
Employment: 2 500 jobs
HCD: 53 mld SAR
GDP: 0.10-0.08%

Algeria
Economic output: the Saipem Group’s contribution to the Algerian economy in 2010 was 1.84 times direct expenditure calculated from the cumulative values of local purchasing, salaries and taxes. This means that for every USD spent by Saipem, an additional 0.84 USD was generated in the economy. Saipem’s contribution to Algerian GDP was about 1.3% in 2010. The Provinces of Oran and Ouargla benefited most from Saipem operations, accounting for 22% and 21% respectively of overall economic output.

Employment: the Saipem Group’s contribution to Algeria in terms of total employment is about 3 times local direct employment. In total, more than 53,000 jobs were created as a result of Saipem Group activities in the country in 2010. Along the supply chain, sectors such as subcontracting and other services (security, legal, etc.) were the principal beneficiaries of job creation.

Human capital development: the Saipem Group’s contribution to Algeria’s human capital development is about 2.43 times the Group’s direct expenditure in training. Hence, as a result of the Saipem Group’s activities in Algeria, the expected economic value generated over a five year period in terms of local employee salary gain is in the order of USD 3.4 million.

Angola
The results of the study in 2009 show that the Saipem Group’s contribution to Angola’s economy is about 1.35-1.41 times the direct expenditure in terms of local purchasing, salaries and taxes, with a total impact in the economy equivalent to 343-357 million USD. The largest recipients of this contribution are local businesses (55%) and households (24%). The Province of Zaire, where the Soyo logistic base is located, benefits from approximately 41% of the total economic output generated by Saipem Group. The strength of the multiplier effects in the supply chain is affected by the current weakness of Angola’s industrial structure.

Employment: the Saipem Group makes an important contribution to the increase of local employment by creating direct, indirect and induced jobs. The results show that Saipem Group’s contribution to Angola in terms of total employment is approximately 2.42-2.63 times the local direct employment, with a comprehensive impact on occupation involving around 8,459-9,205 people, of whom approximately 43% currently reside in the Province of Zaire. Jobs created along the supply chain mostly benefit sectors such as general services (mainly security) and sub-contracting.

Human capital development: the Saipem Group contributes to the increase in knowledge and skills of its employees in terms of additional lifetime earning expectancy and increased employability. The results show that Saipem Group contributions to Angola’s human capital development represent about 1.74-1.85 times the Group’s direct expenditure in training. Hence, as a result of the Group’s activities in Angola, the expected economic value generated over a ten-year period in terms of local employee salary gains is in the order of 13-27 million USD. Access to vocational and professional training provided by Petromar Lda contributes to the development of the Angolan economy and society: on a yearly basis, for every USD of vocational training expenditure, Petromar Lda generates a net present value of 2.12 USD of economic output.

Australia
The study covers the GLNG Gas Transmission Pipeline Project whose objective is to connect the gas fields from Bowen and Surat Basins to the Gladstone LNG Plant located in Curtis Island, Queensland.

As the scope of the analysis is the entire GLNG Pipeline Project, the study includes the value created by both Saipem and the Client between 2011 and 2014 in the engineering, procurement and construction phases of the project.

In 2011-2014, the GLNG Pipeline Project investment generated a cumulative local economic impact in Australia of 2,378 million AUD. GLNG’s highest contribution to the national economy was in 2012 and 2013, accounting for about 0.04% and 0.07% of GDP respectively. The overall impact was 1.9 times the direct effect, meaning that for each AUD injected into the Australian economy there was a ripple effect along the supply chain which generated an additional 0.9 AUD in the country. Queensland benefits from 79% of the total local economic impact of the GLNG project.

The highest GLNG effect on employment was in 2013, with almost 8,000 direct, indirect and induced jobs created. Queensland benefited from 68% of the total local employment impact from the GLNG project.

As regards Human Capital Development, cumulative training expenditures during the GLNG Project will generate an economic value of 21.9 million AUD.

France
Saipem France is an important organisational hub within the Group. It focuses on onshore and offshore engineering, procurement, construction and installation project management, as well as on technological development for these sectors. The aim of the study was to evaluate and quantify Saipem’s capacity to impact positively on the local context in a developed country, despite the fact that operations are performed outside France. The study covered the activities of the Saipem Group in France in the years 2010-2011 with a focus on the Ile de France region.

The overall result showed that the contribution of Saipem to French GDP was 0.07% in 2010 and 0.06% in 2011. The total cumulative economic output was 2,825 million euro with a multiplier effect of 1.90. Indirect and induced economic impacts of Saipem’s activities weighed 47% on the cumulative economic impact. Local business benefited to the tune of 73% of total economic output, followed by households and government. In 2011, the Ile de France region benefited from 30% of the total economic impact generated by Saipem in France. In one year (2011) Saipem generated a total of 11,241 jobs, with a multiplier effect of 4.68, meaning that for each direct job created by the Company an additional 3.68 jobs were created as indirect and induced effects. Engineering services and construction are the industries that most benefited from the creation of indirect jobs along the supply chain. In 2011, the Ile de France region accounted for 47% of the total employment impact generated by Saipem in France. Between 2010 and 2011 Saipem trained more than 2,046 employees for a total of over 56,000 training hours. Expenditure in training of 6.7 million euro will generate an economic value of 19.6 million euro in society over a 5 year timeframe.

In the period under consideration, Saipem provided 21 end-of-study internships and 15 apprenticeships, with differential career development as a benefit. Saipem’s investment in this educational programme generated a positive economic impact of 2.8 million euro in the French economy given by the sum of the students wages, taxes and household consumption. Additionally, it has been calculated that average Saipem salaries during the apprenticeships/internship generate a reduced payback period of tertiary education cost compared to the payback period of an average French engineer. This is the combined result of the Saipem entry level salary and a reduced risk of initial unemployment. Results of the analysis of training and internship/apprenticeship programmes demonstrated that Saipem in France offers valid career opportunities.

Indonesia
An initial study was conducted for the Karimun Yard development project considering the period 2007-2011 (published in Saipem Sustainability 2012). In addition, an overall study for all operations in Indonesia was conducted in relation to the period 2011-2012. Results of this second study are reported here.
The total economic impact of Saipem’s activities in Indonesia was found to be around 453 million USD, comprising direct, indirect and induced effects. Its comprehensive contribution was about 1.62 times direct expenditures, meaning that for each US dollar Saipem spent in Indonesia, an additional 0.62 US dollars was generated in the local economy. Saipem’s operations accounted for 0.03% of the country’s GDP in 2011 and 0.02% in 2012.

The cumulative employment figures add up to 12,874 jobs created directly, indirectly and induced. The multiplier indicates that for each job directly created by Saipem in the country, an additional 2.22 jobs were created as indirect or induced. Jobs created along the supply chain mostly benefited sectors such as subcontracting, general services, catering and accommodation.

Investment in training for local employees generated a cumulative value of 15.2 million USD in the country. For each dollar Saipem invested, there was an additional value generated in society of 13.7 dollars, calculated as increased life-time earning expectancy.

Kazakhstan
The study aimed to provide a comprehensive assessment of the impacts on the economic and social development of Kazakhstan generated by Ersai Caspian Contractor Llc in 2010, with a particular focus on the Mangystau Oblast and the Karakiyanskiy District.

Economic output: Results show that Ersai’s contribution to the Kazakh economy was about 1.33-1.35 times direct expenditure in terms of local purchasing, salaries and taxes, for an impact on the RoK economy totalling 465 million USD. The largest recipients of this contribution were local businesses (70%) and National Government (21%). Saipem’s contribution to the RoK’s economy in 2010 amounted to 422 million USD, approximately 0.34% of GDP.

Employment: Results show that Ersai’s contribution to Kazakhstan in terms of total employment was about 1.40-4.32 times local direct employment. Indeed, as a result of Ersai’s activities, approximately 7,891 jobs were created, 77% of which directly in the Mangystau Oblast. Along the supply chain, sectors such as sub-contracting (36%) and catering and accommodation (32%) were the main beneficiaries.

Human Capital Development: Results show that Ersai’s contribution to human capital development was about 1.68 times the Company’s direct expenditure in training. Hence, the 1.7 million USD spent on vocational and professional training in 2010 will generate a yearly additional value of 1.16 million USD in society. The expected economic value generated over a five-year time frame in terms of local employee salary gain will be about 13 million USD.

Nigeria
Following the first study conducted in Nigeria in 2011 for the period 2007-2010, results were updated in 2013 to assess the socio-economic value created by the Saipem Group in the period 2011-2012. Results of the SELCE study demonstrate that Saipem operations have contributed constantly to the generation of important positive socio-economic impacts, hence to long-term development in terms of wealth, skills and entrepreneurial capacity. The contribution to Nigeria’s GDP has grown over the years, accounting for 0.44% and 0.40% in 2010 and 2011 respectively. In 2012, the contribution remained very high at 0.31%, despite the increase in the country’s GDP and the completion of some operations.

As regards economic output, results show that the Saipem Group’s contribution to the Nigerian economy in 2011-2012 was 1.57 times direct expenditure in terms of local purchasing, salaries and taxes, with a total impact of 2,065 million USD. 65% of the total economic output was generated in the Rivers State (where the Rumuolumeni Fabrication Yard is based), while 11% was generated in the Lagos State.

Employment figures for 2011-2012 show a yearly average of 22,973 jobs created directly, indirectly or induced. The multiplier indicates that for each job directly created by Saipem in Nigeria, about 5.81 additional jobs were created as indirect or induced jobs. 66% of total employment impact generated by Saipem in Nigeria is created in the Rivers State, while the contribution to the Lagos State is 10% of total employment. Jobs created along the supply chain mostly benefit sectors such as subcontracting, transportation, logistics and equipment rental.

The investment in training for Nigerian employees over the period 2011-2012 generated a cumulative value of 4.62 million USD, calculated over a 5-year timeframe. For each dollar invested by Saipem in Nigeria in the training of its local employees, an additional 4.18 dollars, calculated as increased life-time earning expectancy, was generated within society.

Peru
Saipem has quantified the positive effects of Petrex operations in Peru in 2009, including activities in Talara, Iquitos and Lima.

Economic output: Petrex’s contribution to the Peruvian economy was about 1.5 times direct expenditure calculated from the cumulative values of local purchasing, salaries and taxes in 2009. This means that for each 1 USD spent by Saipem, an additional 0.5 USD was generated in the economy. Saipem’s contribution to Nigerian GDP was about 0.05% of the country’s GDP. The Province of Talara, where the Talara base is located to support Petrex’s drilling operations, benefits from approximately 13% of the total economic output generated. The Region of Loreto, where Petrex’ office is located to support its operations in the Region, benefits from approximately 12% of the total economic output generated.

Employment: Petrex’ contribution to Peru in terms of total employment is 2.1 times local direct employment, which means that that for every local job created Petrex generates an additional 1.10 indirect and induced jobs. In total, an average of more than 2,700 jobs per year were created in 2009 as a result of Petrex activities in the country. Jobs created along the supply chain mostly benefit more labour intensive sectors such as catering and accommodation, accounting for at least 64% of the total indirect jobs created. The Province of Talara, benefits from approximately 29% and the Region of Iquitos from approximately 34% of the total direct and indirect jobs generated by Petrex in Peru.

Human capital development: Petrex influences the prosperity of many Peruvian workers, directly and indirectly, through its investments in training and transfer of knowledge, and has a far-reaching effect on the country’s economic development. Training expenditure made by Petrex in fact triggers indirect and induced impacts resulting in an estimated multiplier effect of 2.97. Access to vocational and professional training provided by Petrex generates estimated benefits of 4.5 Mio USD, which is to say that for every USD spent on training, Petrex generates an additional yearly net present value of 1.97 USD of economic output.

Saudi Arabia
The study covers all Saipem Group Operating Companies in Saudi Arabia (Saudi Arabia Saipem, Snamprogetti Saudi Arabia and STAR) in the years 2011, 2012 and 2013.

In 2011-2013, Saipem Group operations in Saudi Arabia generated a cumulative local economic value of about 7,033 million SAR (approximately 1,430 million USD). The overall impact was 1.2 times the direct effect, meaning that for each dollar Saipem spent in the local economy an additional 0.2 dollars were generated.

The highest contribution to Saudi Arabia GDP from Saipem Group operations occurred in 2012, accounting for approximately 1% of the country’s GDP.

Eastern Province, where the majority of Saipem’s operations are ongoing, benefits most from the 60% of total Saipem Group local economic value created, accounting for 4,222 million SAR (about 1,127 million USD). The employment figures for 2013 show a value of 2,600 Saudi jobs created directly, indirectly or induced. Eastern Province is again the area that benefits most, accounting for about 3,123 jobs created (43% of the total).

In addition, the Saipem Group is stable in the green zone of the Nitaqat System with a higher than 20% ratio of national employees vs total company employees in the last 3 years. Specifically, it is worth noting that the results of Saipem drilling operations reached a Saudisation percentage of higher than 40% in the period 2012-2013.

The Saipem Group’s cumulative investment in training activities for Saudi employees created a total economic value of 55.7 million SAR (14.9 million USD) in the Kingdom’s socio-economic context.