Italian energy contractor Saipem's merger with Norwegian peer Subsea 7 may lead to price hikes and less innovation, EU antitrust regulators warned on Wednesday as they opened a full-scale investigation.
The deal announced in February last year would create a leading global player in offshore energy services, from drilling and engineering to laying subsea infrastructure for offshore oil and gas projects. Both companies operate a fleet of vessels for these services.
The European Commission, which acts as the EU competition enforcer, said the deal may have a significant impact on competition in some offshore engineering and construction service markets, confirming a Reuters story.
"The transaction may lead to the loss of significant competition in the market for SURF services, possibly with higher prices and reduced innovation as a result," the Commission said in a statement.
SURF refers to subsea umbilicals, risers, and flowlines which is the subsea infrastructure that connects offshore wells, located as deep as thousands of metres below sea level, to production facilities above the surface.
The Commission set a November 26 deadline for its decision on whether to clear the deal.
The companies could offer to reduce their capacity or sell some of their vessels to ease competition concerns, one source told Reuters earlier this month.
Saipem's customers include Saudi Aramco, QatarEnergy, Abu Dhabi's ADNOC and other national energy while Subsea 7's customer base is more focussed on international oil firms such as BP BP.L and Equinor.
(Reuters)