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MILAN (Reuters) - Italian oil services group Saipem <SPMI.MI> could lose up to 500 million euros (426 million pounds) in payments due from Algeria because of a probe into allegations that it paid bribes to win contracts there, the company said on Tuesday.
"We are having some difficulties to get recent payments and the worst-case scenario is we won't get these payments," Chief Executive Umberto Vergine told analysts.
Europe's biggest oil service group is embroiled in judicial investigations in Italy and Algeria that claim it paid bribes to secure a series of contracts in the North African country worth $11 billion.
The probe, which prompted former long-standing Saipem CEO Pietro Franco Tali to resign in December, has spread to include Paolo Scaroni, the chief executive of oil major Eni <ENI.MI> which owns 42 percent of Saipem.
Saipem and Scaroni have denied any wrongdoing.
Saipem said it had been informed that an Algerian court had extended its investigations, but added it had no details on the state of the case or the people involved.
"We have no timeline on Algeria. We are totally blind on the probe," Vergine said.
Both Eni and Saipem have important contracts in Algeria which is one of Italy's major suppliers of natural gas. Italy generates more than half of its electricity from gas.
Some analysts are concerned the probe could lead to a fine for Saipem. In a recent note Nomura said previous cases of this nature had pointed to penalties worth up to 10 percent of total contract value.
"We have not identified any reason to indicate that the risk (of a fine) exists," Vergine said, reiterating the group had not made any provisions for such an eventuality.
At 1510 GMT Saipem shares were down 2.2 percent while the European oil and gas index <.SXEP> was up 1.74 percent.
Earlier on Tuesday Saipem said its operating profit in the first quarter had fallen 45.8 percent to 202 million euros.
The company shocked markets at the end of January when it suddenly slashed its profit forecasts for 2013, blaming lower margins on new contracts. Its shares have since slid more than 30 percent.
"We don't expect consensus (forecasts) to move up for 2013 and with a rather cautious near-term macro outlook, concerns over 2014 could increase," a London-based oil analyst said.
Saipem has said it expects operating profits to halve to 750 million euros this year but has not provided any specific targets for 2014. It is scheduled to present a strategic review of its businesses on Wednesday.
(Reporting By Stephen Jewkes; Editing by Greg Mahlich)