Reuters reported that Kinder Morgan Inc's planned purchase of El Paso Corporation to create the largest US natural gas pipeline network will receive a close look from US regulators, who may require substantial pipeline divestitures.
As per report, the USD 21 billion merger will almost certainly receive heavy scrutiny from the Federal Trade Commission, which traditionally reviews large natural gas pipeline mergers, according to antitrust experts.
The companies' pipelines in the Rocky Mountains will be a key focus for the FTC.
Mr Carl Kirst, analyst at BMO capital markets, predicting that the FTC will approve the deal, said that "When you look at overlap today, there is some in the Rocky Mountains. Maybe they have to sell one pipeline."
The combined company will be a pipeline juggernaut with the ability to deliver massive amounts of crude oil and natural gas over 80,000 miles of pipe stretching from coast to coast, and could demand higher transport fees from oil and gas producers.
Mr Rich Kinder CEO of Kinder Morgan said that he believes the merger will be approved, but he acknowledged some areas where the companies' pipeline networks overlap. He added that "We certainly anticipate we will obviously have to comply with the regulator, in this case, the US Federal Trade Commission, and we'll work with them to satisfy whatever their concerns are; but we don't see that as a major obstacle and we do expect to close, we're thinking, in the second quarter of 2012."
Mr Kinder said his company would work with the FTC to address any issues raised about overlapping pipeline networks.
The Federal Energy Regulatory Commission regulates the interstate natural gas pipelines owned by Kinder Morgan and El Paso, but will not review the merger.
Mr Bruce McDonald, a former Justice Department deputy assistant attorney general now at Jones Day law firm, said that while the FTC will closely examine the merger, it is likely that the deal will ultimately be allowed to move forward. He added that "Some divestitures may be required but it seems unlikely that the entire deal will be blocked."
(Sourced from www.reuters.com)
