A proposed merger between Italy’s engineering, drilling, and construction services giant Saipem and the Luxembourg-domiciled Subsea7 is facing deeper scrutiny in the European Union (EU) over offshore market concentration due to subsea umbilicals, risers, and flowlines (SURF) and carbon capture and storage (CCS) market dominance, potentially threatening to undermine competition, raise costs, and curtail innovation.
The European Commission has opened an in-depth investigation under the EU Merger Regulation to assess the proposed merger between Saipem and Subsea7, which aims to give birth to Saipem7 as a combined company, over concerns that the proposed concentration may significantly impact effective competition in some offshore engineering and construction service markets.
This probe follows the European Commission’s preliminary findings that the merger would be largely complementary in some areas, including offshore wind projects and so-called conventional offshore projects; however, it appears that the business combination would further consolidate the SURF services market at this stage.
As the subsea infrastructure that connects offshore wells, often located thousands of meters below sea level, to production facilities above the surface, SURF comprises different types of pipes and cables, which are installed on, or near, the seabed.
These services are also used in CCS projects, which involve capturing carbon dioxide (CO2) emissions from industrial facilities and power plants, transporting the CO2 through pipes and permanently storing it in geological formations often deep beneath the seabed to prevent it from being released into the atmosphere.