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.
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.
READ MORE: Who owns the North Sea? Interactive map lets people find out
“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.
READ MORE: Scottish Power boss calls for major government intervention on UK energy bills
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.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here