In Brazil, oil majors have united to oppose the Subsea7/Saipem merger

Public documents show that oil majors in Brazil are united against a merger proposed between energy contractors Subsea7 & Saipem. Cade, the antitrust agency, has requested new data from both firms on Friday for its investigation. In a filing in November to Cade, the Brazil oil industry group IBP stated that a new company, called Saipem7 would be strong enough to impose extra costs, delay projects, and force some clients into exclusive, long-term contracts. Cade, weeks after IBP's comment, which represents the oil majors of Brazil, sent Cade a request for additional data on Friday. Cade said it was lacking the information needed to analyze the proposed merger.

Subsea7 & Saipem both made separate statements to Cade stating that they are engaging with Cade & relevant authorities as per the terms of their merger agreement submitted in July.

IBP declined comment and Cade pointed to public documents. The companies stated in their merger statement that if the group is combined, it will have a backlog of orders of 49.9 billion euros (43 billion euros), revenues of around 21 billion euro and core earnings exceeding 2 billion euros.

COMPETITIVE CONCERNS

TotalEnergies, a French company, also presented a report listing the impacts of the merger. The company said that no measure could be taken to neutralize the competitive concerns about Saipem7’s potential dominance over subsea risers, flowlines and umbilicals - also known as SURF Projects. Exxon Mobil also expressed concerns in this area. Total's filing stated that Saipem7 will control eight of only 12 ships capable of executing certain SURF project in deep water and in adverse weather. The filing also raised concerns over dominance of energy firms in areas such as offshore wind power and decommissioning.

Total has not responded to our request for a comment. Subsea7's Chief Executive John Evans stated that he expects the merger to be completed by the second half 2026. Evans stated that Cade is following "the steps we expected it to take." Exxon, Brazil’s state-run Petrobras, and rival oil service provider TechnipFMC requested the Cade analysis in September. The firms wanted to block the deal, or impose remedies like asset sales, to preserve competition in Brazil. Documents show that Cade officials met with officials from the U.S. and Mozambique, as well as IBP and major oil service companies.

(source: Reuters)