The Competition and Markets Authority (CMA) is considering SLB's
offer of undertakings to resolve the competition concerns it
identified during its Phase 1 investigation of SLB's acquisition
of ChampionX.
SLB and ChampionX are leading global suppliers of oilfield
services, equipment and related technologies. Both companies have
significant operations (including UK assets) supplying important
inputs to oil and gas companies and other oilfield services firms
in the UK North Sea. They hold substantial positions in the UK
markets in which the CMA has identified competition
concerns.
The undertakings offered include:
-
the sale of SLB's UK production chemical technologies (PCTs)
business to a CMA-approved buyer
-
the sale of ChampionX's global US Synthetic business, which
supplies market-leading polycrystalline diamond (PCD)
bearings used in certain directional drilling services by
SLB's rivals in the UK, to a CMA-approved buyer
-
a licence covering relevant intellectual property and
know-how to a CMA-approved alternative developer of quartz
sensors and transducers supporting the growth of a strong
alternative supplier in this segment, together with
agreements to provide SLB's rival suppliers of permanent
downhole gauges (PDGs) in the UK access to ChampionX's
market-leading quartz sensors and transducers for an interim
period
Having provisionally found that these undertakings could address
its concerns, the CMA now has 40 working days to consider them in
more detail, including seeking third-party feedback. If
satisfied, the CMA will proceed to clear the deal subject to its
final acceptance of the undertakings.
The CMA is concerned that the deal – if allowed to proceed
without remedies – could cement the companies' substantial
positions in highly concentrated markets, potentially leading to
higher costs, fewer alternatives and reduced innovation,
impacting the competitiveness of the UK's oil and gas industry.
Sorcha O'Carroll, Senior Director for Mergers at the CMA,
said:
Effective competition in the oil and gas industry drives
innovation, pushing companies to reduce costs and develop more
efficient ways to produce energy. It also helps ensure that
prices remain competitive, benefiting consumers whilst allowing
companies to meet global energy demands.
We are continuing to engage constructively with the companies on
the proposals they have put forward to resolve our competition
concerns. We'll also consider any feedback we receive on these
undertakings before reaching a final decision
More information can be found on the Schlumberger /
ChampionX case page.
Notes to Editors:
-
The CMA found in its Phase 1 decision that the merger could
result in reduced competition in the supply of production
chemicals that are used in oil and gas production in the UK
North Sea. The CMA also found that the merger could harm
competition in the supply of directional drilling services
using rotary steerable system (RSS) and in the supply of
PDGs, by restricting the access to key inputs (PCD bearings
and quartz sensors/transducers, respectively) for SLB's rival
producers in these markets.
-
PCTs are essential for optimising performance, safety, and
efficiency of oil and gas operations by improving production
rates and preventing issues like corrosion.
-
Directional drilling services using RSS enable precise
control over wellbore trajectory, improving drilling
efficiency and accuracy while minimising risks and costs in
complex oil and gas reservoir environments. PCD bearings are
an important input to directional drilling services,
particularly well-suited for operating under harsh
conditions, such as the conditions in the UK North Sea.
-
PDGs provide continuous, real-time monitoring of downhole
conditions such as pressure, temperature and fluid levels,
helping optimise production and ensure the safety and
efficiency of oil and gas operations. Quartz sensors,
incorporated into transducers, are typically used within PDGs
for high-value assets in offshore areas and are known for
their robustness and accuracy in harsh downhole environments.
