MILAN (Reuters) - Saipem's stock plunged 12.4 percent following damage from an accident involving one of its pipelaying vessels and Saudi Aramco's decision to abandon plans to expand oil capacity.

Aramco said it received a request from the Saudi government to reduce maximum sustainable oil production capacity to 12 million barrels per day (bpd) from 13 million bpd.

Analysts say the decision could decrease demand for Saipem's services in the Middle East. In 2020, the Italian energy contractor and Aramco signed a 12-year agreement for onshore engineering and construction activities.

The broker specified that a significant portion of Saipem's shallow water fleet has been contracted to Aramco.

Around 5:05 p.m., Saipem's stock fell 12.4 percent to 1.32 euros while Milan's blue-chip index rose above 1 percent. Earlier, the stock had touched its lowest level since Oct. 26 after news of the accident in Australia.

Saipem confirmed that an accident during work on a pipeline operated by the Australian group Woodside involved its pipelaying vessel Castorone, but there were no injuries or serious damage to the vessel.

Woodside also confirmed that there were no injuries among personnel and only localized damage to Saipem's vessel. Woodside continues to support its contractor in the installation of the trunkline, a Woodside spokesman said.

(Translated by Chiara Scarciglia, editing Stefano Bernabei)