Yahoo Finance North Sea merger sparks regulator’s fear of price hikes
A multi-billion pound deal in the North Sea could increase costs and reduce the quality of service for oil and gas producers, the competition regulator fears.
The £2.6 billion merger of Maersk Drilling and Noble could allow the firms to exercise too much control over the market, reduce competition and spark knock-on effects for households, the Competition and Markets Authority (CMA) warned.
A CMA probe found the offshore drilling contractors overlap in their supply of ‘jack-up’ rigs, a type of oil rig used in the North Sea.
We’re therefore concerned that the loss of competition that this deal would bring about could result in higher prices or lower quality services, increasing operating costs for oil and gas producers in the UK North Sea
Colin Raftery, CMA
The regulator said Maersk and Noble compete closely and face limited competition as two of the four biggest suppliers of offshore drilling.
“Offshore drilling services are critical for oil and gas producers,” said Colin Raftery, the CMA’s senior director of mergers.
“We’re therefore concerned that the loss of competition that this deal would bring about could result in higher prices or lower quality services, increasing operating costs for oil and gas producers in the UK North Sea.”
The UK faces an energy crisis and four in 10 people in Britain could fall into fuel poverty in October, energy bosses warned this week.
At the start of April, regulator Ofgem increased the price cap by 54% as wholesale prices for energy suppliers soared.
And the rising cost of fuel pushed the average price of petrol to record highs of £1.67 a litre this year and £1.79 a litre for diesel, hitting motorists across the UK.
The CMA’s investigation into Maersk and Noble, opened in February, focuses on jack-up supplies across north west Europe, including the UK, Denmark and the Netherlands.
Both businesses already said they expect to sell several oil rigs to get over concerns about loss of competition.
The drilling giants now have five working days to offer proposals to the CMA to address the competition concerns, after which the regulator has a further five working days to consider whether to accept them or refer the case for further investigation.
The merger was announced in November and the combined company will be called Noble Corporation, with its shares listed on the New York Stock Exchange and Nasdaq Copenhagen.
