Oil Majors Oppose Subsea7-Saipem Merger in Brazil

© André Muller / Adobe Stock

Oil majors operating in Brazil have closed ranks to oppose a proposed merger between energy contractors Subsea7 and Saipem, and antitrust agency Cade has asked the two firms to provide its probe with new data on Friday, public documents seen by Reuters show.

The resulting new firm, to be called Saipem7, would have a strong enough position to impose additional costs, delay projects and pressure some clients into exclusive long-term contracts, Brazil oil industry group IBP said in a November filing to Cade.

On Friday, weeks after receiving the comment from IBP, which represents oil majors in Brazil, Cade asked both firms for more data, saying it lacked information necessary for analysis of the proposed merger.

In separate statements to Reuters, both Subsea7 and Saipem said they were engaging with Cade and relevant authorities in line with terms of their merger agreement filed in July.

IBP declined to comment, and Cade referred Reuters to public documents.

If realized, the combined group will have an order backlog of 43 billion euros ($49.9 billion), revenue of about 21 billion euros and core earnings of more than 2 billion euros, the companies said in their July merger statement.

COMPETITIVE CONCERNS

Beyond the filing by IBP, France's TotalEnergies presented a study listing impacts of the merger. It said no measures could neutralize competitive concerns regarding Saipem7's potential dominance in subsea umbilicals, risers and flowlines - so-called SURF projects. Exxon Mobil had also raised concerns in that area.

Total's filing said Saipem7 would control eight of just 12 ships in the world able to execute certain SURF projects in deep water or in adverse weather. It also raised concerns about dominance in potential areas of growth for energy firms, such as decommissioning services and offshore wind power.

Total did not reply to a request for comment.

During a November 20 earnings call, Subsea7 Chief Executive John Evans said he expected the merger to wrap up by the second half of 2026. Evans said Cade was following "the steps that we had expected it to follow."

The Cade analysis was requested by Exxon, Brazil's state-run oil firm Petrobras and rival oil services provider TechnipFMC in September, with the firms calling to block the deal or impose remedies such as asset sales to preserve competition in Brazil.

In addition to receiving comments from IBP, major firms and oil services companies, documents show Cade officials have met with officials in the U.S., Mozambique and the U.K., which recently approved the merger.

(Reuters - Reporting by Fabio Teixeira; Editing by David Gregorio)