UPDATE 1-SNC-Lavalin says client terminates oil sands contract

Fri Dec 21, 2012 5:42pm EST

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* SNC last year said contract was worth more than C$650 mln

* SNC not immediately available for comment

Dec 21 (Reuters) - SNC-Lavalin Group Inc said on Friday that a client had notified the company that it was terminating an engineering, procurement and construction contract awarded to SNC for a froth treatment plant in Alberta's oil sands last November.

SNC said in a brief statement the project will be removed from the company's backlog in the fourth quarter, but that it did not anticipate that its termination will have a material impact on fourth-quarter earnings.

Announcing the award last November, SNC said the value of the contract was in excess of C$650 million ($653.50 million). It did not name the client at the time but said it was a "major oil sands mining producer."

Construction had been due to start in February 2012.

SNC, which is Canada's largest engineering company, could not immediately be reached for comment.

The company has been grappling with a number of scandals this year, including the arrest of its previous chief executive last month on charges of fraud and the use of false documents.

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