On November 25, 2019, on a drill floor in the Permian Basin in Lowen County, Texas, USA, dust was raised around the jack of a crude oil pump, burning excess gas. REUTERS/Angus Mordant

Reuters, New York/Washington, October 21-U.S. antitrust regulators have extended approval procedures for at least five oil and gas mergers and acquisitions in the past three months as President Joe Biden’s administration is reviewing transactions in response to soaring energy prices. According to regulatory documents and company lawyers.

As U.S. crude oil futures hit multi-year highs, policymakers are facing increasing pressure to respond to consumer anxiety about soaring retail gasoline prices. According to a Reuters report last week, the White House has been calling U.S. oil and gas producers to ask how they can help lower prices.

This move also symbolizes the new measures taken by the Federal Trade Commission (FTC) to protect consumers, workers, the environment and society as a whole. Under the leadership of the new chairman, Lina Khan, antitrust regulators have taken a tough stance on deals from technology to healthcare.

In an interview, more than a dozen industry sources, including lawyers and bankers who advise on energy transactions, said that such review is rare in the oil and gas industry, where transactions usually go through regulatory agencies.

This is because these companies sell their products to the global market, and regional integration has no impact on energy prices determined by global supply and demand.

Maureen Ohlhausen, the antitrust and competition law chairman of Baker Botts LLP, who served as the acting FTC chairman during the former Trump administration from January 2017 to April 2018, called this review unprecedented.

"Although the former Democratic Federal Trade Commission members wanted to actively enforce the law, the industry was told what the standards were, the transactions were reviewed and things were going well. This is really different," Olhausen said.

"I believe the FTC chairman actually wants to prevent the merger."

An FTC spokesperson declined to comment.

Transaction advisors and documents show that the US Federal Trade Commission is making a so-called second request for more transactions to seek more information and documents. The second request may delay the regulatory approval of the transaction for several months.

Darren Tucker, chairman of the antitrust practice of Vinson & Elkins LLP, said: “I know that there have been two mergers in the past few months. The FTC staff believes that there is no need to issue a second request. But it was rejected by the management.” He refused to disclose the names of the two transactions.

In the proposed transaction that received the second request in September, HollyFrontier Corp (HFC.N) purchased Sinclair Oil for US$2.6 billion and Vertex Energy Inc (VTNR.O) sold its oil collection and recovery assets to Safety for US$140 million. -Kleen Systems Inc, regulatory documents show. read more

According to people familiar with the matter, private equity firm EnCap Investments' proposal to acquire oil and gas producer EP Energy for $1.5 billion has also received a second request in recent weeks. read more

EnCap and EP Energy did not respond to requests for comment.

The source said that in recent weeks there were other transactions that received a second request, but declined to reveal their identity.

Second requests involving oil and gas producers are rare, and it is more common for the Federal Trade Commission to review transactions involving pipelines and gas stations. The pipeline operator Energy Transfer LP (ET.N) said in May that it had received a second request for its $7.2 billion acquisition of Enable Midstream Partners LP (ENBL.N).

According to data analysis, the US Federal Trade Commission's review may hinder transactions in the oil field. In the third quarter, the value of mergers and acquisitions between US oil and gas producers has fallen from US$33.4 billion in the second quarter to US$18.5 billion. .

After the COVID-19 pandemic, as the reopening of the global economy pushed up energy consumption, the White House has been publicly asking the FTC to take action. Brian Deese, director of the National Economic Council, wrote to FTC Chairman Khan in August, asking her to investigate soaring energy prices.

Khan responded that the FTC will review the integration between gas station operators, but will also look more broadly at transactions in the energy industry. read more

The Biden White House has made climate change a priority on its administrative agenda, which has angered the oil and gas industry. It temporarily stopped issuing new leases for drilling on federal land and proposed ending some fossil fuel subsidies. Energy companies argue that these measures will push up energy costs. read more

To be sure, it is unclear whether the FTC will seek to prevent it from accepting any energy transactions for the second request.

Since BP Plc (BP.L) acquired Atlantic Richfield Co for US$27 billion in 2000, regulators have not questioned major mergers of oil and gas producers. It sued to block the merger and agreed to give up its opposition to the production area in Alaska after BP proposed to divest oil.

ConocoPhillips (COP.N) proposed to acquire the Permian Basin assets of Royal Dutch Shell (RDSa.L) for USD 9.5 billion, which is a major test for the FTC. This was announced last month, and any second FTC request will be made in the coming weeks. read more

Shell and ConocoPhillips declined to comment.

(In the penultimate paragraph of this story, the reference to the Shell/ConocoPhillips deal is corrected)

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