Competition regulators are concerned that multi-billion pound transactions in the North Sea could increase costs and reduce quality of service for oil and gas producers.
The £ 2.6 billion merger of Maersk Drilling and Noble could allow businesses to over-control the market, reduce competition and have a knock-on effect on households, the Competitive Markets Authority (CMA) warned.
A CMA study found a duplication of offshore drilling contractors in the supply of “jack-up” rigs, a type of oil drilling equipment used in the North Sea.
Regulators said Maersk and Noble are in close competition and face limited competition as two of the four largest offshore drilling suppliers.
“Offshore drilling services are important for oil and gas producers,” said Colin Raftery, Senior Director of Mergers at CMA.
“Therefore, we are concerned that the loss of competition resulting from this transaction could lead to higher prices and lower quality of service, which could increase operating costs for oil and gas producers in the North Sea of the United Kingdom.”
The UK is facing an energy crisis, and energy bosses warned this week that four out of every ten people in the UK could fall into fuel poverty in October.
At the beginning of April, regulator Ofgem raised its price cap by 54% due to soaring wholesale prices for energy suppliers.
Soaring fuel costs also hit drivers across the UK with an average gasoline price of 1.67 pounds per liter and diesel at 1.79 pounds per liter this year.
The CMA survey on Maersk and Noble, launched in February, focuses on jack-up supplies throughout Northwestern Europe, including the United Kingdom, Denmark and the Netherlands.
The two companies have already stated that they are expecting to sell some oil rigs to overcome concerns about loss of competition.
The drilling giant now has five business days to provide suggestions to the CMA to address competitive concerns, after which regulatory agencies will consider whether to accept them or refer to the case for further investigation. There are 5 more business days to do.
The merger was announced in November and the combined company will be called Noble Corporation and its shares will be listed on the New York Stock Exchange and Nasdaq Copenhagen.