ADNOC Led Consortium Bids to Take Over Australian Gas Giant

Australia’s Santos has said it would accept an $18.7-billion takeover offer made by a consortium led by Emirati Adnoc, which values the company’s stock at a 28% premium to its closing price last Friday.

The Emirati energy giant, acting through its investment arm XRG, teamed up with Abu Dhabi Development Company and private equity major Carlyle on the offer, which is motivated by Adnoc’s global gas expansion plans.

Santos operates two large LNG facilities in Australia: Darwin LNG and Gladstone LNG. Santos is also the majority shareholders in the PNG LNG project in Paua New Guinea, after taking over Oil Search back in 2021. PNG LNG is considered one of the lowest-cost LNG projects globally and, according to Reuters, is the most attractive of its assets. The company also recently got the green light on another gas project, this time an onshore coal seam project, which will supply the local market and which will cost $2.3 billion to develop.

“The Santos Board confirms that, subject to reaching agreement on acceptable terms of a binding scheme implementation agreement, it intends to unanimously recommend that Santos Shareholders vote in favour of the potential transaction, in the absence of a superior proposal,” Santos said in its statement.

While the Australian gas company’s leadership may be in favor of the deal, regulators may have misgivings, which makes the future of the deal uncertain. Santos controls critical energy infrastructure in Australia, MST Marquee senior energy analyst Saul Kavonic said, as quoted by Reuters, which would make regulatory approval of its takeover by a foreign company a challenge. Yet approval from Papua New Guinea is also unlikely, analysts pointed out. In total, the companies need the go-ahead from six separate agencies in Australia, Papua New Guinea, and even the United States, to proceed with the deal.

By Irina Slav for Oilprice.com

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