European Commission warns of price hikes due to merger of two European energy companies
Brussels, July 22 (KUNA) -- The European Commission warned on Wednesday that the merger of Italian energy company Saipem with its Norwegian counterpart Subsea 7 could lead to higher prices and reduced innovation in certain offshore engineering and construction services markets.
In a statement, the Commission said the proposed deal could significantly affect effective competition in some offshore engineering and construction services markets, noting that the merger might result in “a substantial loss of competition in the SERV (Subsea Engineering and Riser/Vessel) services market, potentially leading to higher prices and reduced innovation.”
It explained that SERV services include riser cables and pipelines, and flowlines, which are infrastructure connecting offshore wells—often located thousands of meters below the sea surface—to production facilities above the surface.
The Commission pointed out that preliminary investigation results suggest the deal could further concentrate the SERV services market in oil and gas sectors and carbon capture and storage (CCS) projects, noting that the global market for these services is already dominated by a limited number of companies.
It highlighted that the two companies are among the top three global players in this field, with very few alternatives capable of effectively competing with them.
The Commission added that the merger appears largely complementary in certain areas, including offshore wind projects and some traditional offshore projects, but expressed initial concerns that it could reduce competition in the SERV services market, which already exhibits high concentration.
These services also include carbon capture and storage projects, which involve capturing carbon dioxide emissions from industrial facilities and power plants, transporting them via pipelines, and permanently storing them in geological formations, typically beneath the seabed, to prevent leakage into the atmosphere.
The two companies announced in February last year a merger that would create a major global player in offshore energy services, ranging from drilling and engineering to laying subsea infrastructure for offshore oil and gas projects, and they own a fleet of vessels used to provide these services.
The European Commission has set November next year as the deadline for taking a decision on whether to approve the deal. The companies may offer commitments to address competition concerns, such as reducing their capacities or selling some of their vessels. (End) A.R.N. / H.M.F.
