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 Wednesday as they opened a full investigation.
The deal announced last February would create a global leader in offshore energy services. This includes drilling, engineering and 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 could have "a significant impact" on the competition in certain offshore engineering and construction services markets.
The deal, it said, would reduce the number players on the SURF market. Saipem & Subsea7 - two of the market leaders - are the only credible alternatives.
Subsea umbilicals, risers and flowlines (SURF) is the subsea infrastructure consisting of pipes and cables that are installed on the seabed to connect offshore wells with production facilities above surface. These pipes and cables are also used for carbon capture projects.
The Commission stated that the transaction could lead to a loss of competition on the market for SURF, which would result in higher prices and reduced innovation.
Saipem and Subsea 7 didn't immediately respond to emails requesting comment.
The investigation will also examine the markets for trunkline services, which include?the laying larger export pipes? and the decommissioning obsolete subsea equipment.
The Commission has set a deadline of November 26 for its decision about whether or not to approve the deal.
One source said earlier this month that the 'companies might offer to reduce their capacities or sell some vessels to ease concerns about competition.
Saipem customers include Saudi Aramco and QatarEnergy as well as Abu?Dhabi ADNOC, and other national energy firms, while Subsea 7 is primarily focused on international oil companies such BP and Equinor. (Reporting and editing by Inti landauro and Kirsten Donovan.
(source: Reuters)
