* Milan prosecutors probing corruption in Algeria
* Saipem shares down 8.2 percent
* Saipem CEO resigned late on Wednesday
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MILAN, Dec 6 Shares in Saipem dropped
on Thursday after Europe's biggest oil services group came under
investigation for alleged corruption in Algeria, sparking
concern over possible fines and future operations in the
The Italian group's shares were down 8.2 percent at 0950
GMT. A European oil and gas index was up 0.5 percent.
Saipem said on Wednesday chief executive Pietro Franco Tali
had resigned after it emerged Milan prosecutors were
investigating orders Saipem had won in Algeria.
The company, which said it acted in compliance with the law,
said the probe was looking into activities up through 2009.
A report in Italian newspaper Il Sole 24 Ore said the case
focused around an order worth about 580 million euros ($758
million) to build a gas pipeline in Algeria called GK3.
Saipem, which is controlled by Italian oil and gas major Eni
, has worked on several contracts in Algeria with state
energy firm Sonatrach.
Saipem helped build the pipeline from Algeria that today
transports around a fifth of Italy's gas supplies and is
involved with Sonatrach in the GALSI gas pipeline project that
will carry Algerian gas into Italy via the island of Sardinia.
It was not clear what the repercussions might be on the
group's business in Algeria, while some analysts were concerned
about possible fines.
A note from Nomura on Thursday said an analysis of
corruption charges across the sector since 2000 showed that
fines were typically in a range of $50-200 million.
Saipem said on Wednesday it did not think the probe would
have any material impact on its results.
The company's order backlog to Algeria stands at around 4
percent of the group total.
"We see the unexpected change in CEO as a negative given Mr
Tali's strong track record and that it will add uncertainty over
future operations," a London broker said.
Tali, who first started working at Saipem in 1993, has been
at the helm of the company since 2000 and is one of the most
highly respected CEOs in the oil services industry.
Shares in Eni were up 0.5 percent. Eni's chief financial
officer, who had been CFO at Saipem till 2008, also resigned on
($1 = 0.7652 euros)
(Reporting By Stephen Jewkes; Editing by Lisa Jucca and Mark