Halliburton megadeal: Why LatAM should be uneasy

Halliburton gave the impression of seeing red lights flashing in the distance when it outlined a multi-billion dollar divestment plan as part of its purchase of oil services rival Baker Hughes. 

The move, it said, would mollify concerns from anti-trust authorities over Monday's announcement of the US$35bn takeover.

"Halliburton has agreed to divest businesses that generate up to US$7.5bn in revenues, if required by regulators, although [we] believe that the divestitures required will be significantly less," the company said. 

Halliburton and Baker Hughes are the world's second and third largest oil field service companies behind Schlumberger.

Between them they have more than 136,000 employees, a figure analysts say will be slashed as a result of a planned US$2bn downsize.

According to Halliburton, the acquisition will leave the new company - which will maintain Halliburton's name - with "unsurpassed depth of products and services".

"The resulting company will provide a comprehensive suite of products and services to customers in virtually every oil and natural gas producing market in the world," the statement said. 

In addition, the merger will create opportunities for new synergies and higher cash returns to stockholders, the company added. 

So what will be the impact of the deal on Latin America?

Critics fear the move will reduce competition in the industry, leading to higher costs for operators already hit by plummeting global oil prices. 

The impact will arguably be more acute in Latin America, where local service firms already struggle to compete with their international counterparts. 

Both Halliburton and Baker Hughes have a vast presence throughout the continent. 

Halliburton's portfolio includes operations in Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Panama and Venezuela. 

In a third-quarter conference call last month, the firm's CEO David Lesar highlighted Mexico as a growth focal point, citing imminent project startups and the positive effects of the country's energy reform. 

But it is further south where the merger will arguably be most closely felt.

Pre-salt activity in Brazil and new unconventional opportunities in Argentina are expected to provide a major catapult to regional oil services demand in 2015 and beyond. 

Halliburton last month said it was negotiating "a more profitable" retender of a directional drilling contract with Brazil federal energy major Petrobras. 

The comments came as Baker Hughes said its growing portfolio in Brazil would help soften the impact of falling crude prices.

Ecuador, too, offers a verdant outlook after Halliburton last month signed long-term deals with state-oil firm Petroamazonas for the development of nine mature fields.

Despite the merger's breadth, Halliburton is still little more than half the size of Schlumberger. 

But the union will leave the new company with a global market share of 37% for hydraulic fracturing, 41% for drill bits and 49% for well cementing services.

When factoring in Schlumberger's market chunk, the merger will narrow the space for other competitors to a sliver.

It is reason enough for Halliburton to push ahead with divestment plans in an attempt to ease fears of a market duopoly. But even that might not be enough keep the red lights at bay.