EU antitrust regulators warn that the Saipem-Subsea 7 merger could lead to a price increase

The'merger' of Italian energy contractor Saipem with Norwegian counterpart Subsea 7 could 'lead to higher prices and less innovation. 'EU antitrust regulators warned a day earlier as they opened a full-scale probe.

The deal, announced in February of last year, would have created a global leader in offshore energy services. This includes drilling and engineering as well as subsea construction for offshore oil and natural gas projects. Both companies have a fleet for these services.

The European Commission, the EU's competition enforcer, confirmed that the deal "may have an impact on some offshore engineering markets and construction services."

The Commission stated that the transaction could lead to a "loss of significant competition" in the market for SURF service, which may result in higher prices and less innovation.

Subsea umbilicals risers and flowlines are the subsea infrastructure which connects offshore wells located thousands of metres beneath sea level to production facilities on the surface.

The Commission has set a deadline of November 26 for its decision on whether or not to approve the deal.

One source said earlier this month that the companies could reduce their 'capacity' or sell some vessels to 'ease competition concerns.

Saipem customers include Saudi 'Aramco', QatarEnergy and Abu Dhabi's ADNOC - as well as other national energy firms. Subsea 7 is focused on international oil companies such BP and Equinor. (Reporting and editing by Inti landauro, with Foo Yunchee)

(source: Reuters)