Is the Subsea 7-Saipem Combination Too Powerful for Brazil?

The proposed merger between Subsea 7 S.A. (SUBCY) and Saipem SpA has sparked a rare unified response from Brazil’s major oil operators, who warn that the deal could reshape competition in one of the world’s most important deepwater markets. The combined entity — tentatively dubbed “Saipem7” — would become a subsea engineering giant with a €43 billion backlog, around €21 billion in annual revenues, and more than €2 billion in core earnings. While the scale appears efficient on paper, clients worry it could give one contractor too much influence.

Brazil’s Industry Raises Concerns

Brazil’s oil industry group IBP, representing operators such as Petrobras (PBR), ExxonMobil (XOM) and TotalEnergies (TTE), submitted a formal warning to antitrust regulator Cade. The group argued that the merged Subsea 7–Saipem company could push up project costs, slow execution and pressure clients into exclusive, long-term agreements. Cade responded by requesting additional data, saying crucial information was missing from the initial filings. Subsea 7 and Saipem told regulators they are cooperating fully, but industry concerns remain high.

Competitive Pressure in SURF and Adjacent Markets

The strongest objections focus on the subsea umbilicals, risers and flowlines (SURF) segment, where only a few players operate on a global scale. French multinational TotalEnergies submitted its own analysis, arguing that no remedy would fully offset the competitive risks posed by Saipem7. The Zacks Rank #3 (Hold) company noted that the merged group would control eight of the 12 vessels worldwide capable of executing the most complex deepwater SURF work.

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American energy behemoth ExxonMobil raised similar concerns, while Brazil’s state-run energy giant Petrobras and oilfield services provider TechnipFMC requested a full antitrust review months earlier. Operators fear that if one firm controls most high-spec capacity, costs will rise and scheduling flexibility will shrink. Total also cautioned that Saipem7 could dominate fast-growing segments like offshore wind and decommissioning, further concentrating market influence.

Cade’s Deliberate Approach

Cade is proceeding methodically, seeking input from local operators and coordinating with regulators in the U.S., U.K. and Mozambique. Although the U.K. has already approved the merger, Brazil remains the key battleground. Subsea 7 CEO John Evans stated on Nov. 20 that the deal is still expected to close in the second half of 2026 and that Cade’s measured pace is in line with expectations. Even so, the level of scrutiny signals how significant this case is for competition in a sector critical to Brazil’s economy.

Conclusion

The likes of Petrobras, ExxonMobil and TotalEnergies are effectively drawing a line, warning that consolidating two major contractors into one global powerhouse could reshape pricing, timelines and strategic control across its deepwater market. With substantial economic weight behind the combined entity, regulators must choose between allowing efficiencies from scale or preserving competition in a capacity-constrained sector. Cade’s eventual ruling will determine not just the fate of the Subsea 7–Saipem merger but also the broader direction of Brazil’s offshore future.

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This article originally published on Zacks Investment Research (zacks.com).

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