Italian oil service company Saipem said it had won a contract to lay replacement pipelines at the giant Kashagan field in Kazakhstan, worth around $1.8 billion.

Last month sources with knowledge of the matter told Reuters Saipem was in pole position to win the pipeline contract which could be worth up to $2 billion.

In a statement yesterday Saipem said the North Caspian Operating Company had awarded the company the contract for the construction of two 95km pipelines.

'The construction will be completed by the end of 2016,' it added.

Saipem, 43 per cent owned by Italy's national oil company Eni , won a contract back in 2004 to lay the original pipelines for the $50 billion project.

First production at the field, already plagued by delays and cost overruns, finally started in September 2013 but was halted just weeks later after the discovery of gas leaks caused by stress fractures.

'Works to mend that technological mishap which occurred in 2013 are planned to be completed in December 2016,' said Kazakh Energy Minister Vladimir Shkolnik.

Saipem has lost billions of euros in its market value over the past two years following two profit warnings, a corruption investigation in Algeria and a grim industry outlook.-Reuters