East Pipes Integrated Company for Industry has agreed to cancel its SAR 153 million ($40.8 million) contract with Saudi Arabian Oil Company (Aramco).

The cancellation of the deal is on the request of the state-owned oil giant, East Pipes said in a disclosure on the Saudi Stock Exchange (Tadawul) on Thursday.

Late last year, East Pipes signed an eight-month contract to manufacture and supply some steel pipes to the Saudi energy giant.

East Pipes did not specify the reason behind Aramco’s request for cancellation, but it assured that the latest development will not have any financial impact.

“The company agreed to stop and cancel the contract because there is no financial impact that would affect the company’s performance,” it said.

The company added that the Aramco deal has not been included in its production schedule for the current year and that it has not acquired the raw materials needed to manufacture the pipes.

(Writing by Cleofe Maceda; editing by Seban Scaria) seban.scaria@lseg.com