Jim Chalmers faces ‘captain's call' over Abu Dhabi bid for Australian oil and gas giant Santos

The Guardian

11 hours ago

Jim Chalmers may need to make a 'captain's call' on whether to approve the takeover of Australian oil and gas giant Santos by the investment arm of an Abu Dhabi state-owned entity, according to analysts, amid questions over whether the proposal will boost domestic supplies.
The board of the Adelaide-headquartered oil and gas company has expressed support for the $30bn bid that, if successful, would place a series of strategic assets into foreign-owned hands.
Santos has a portfolio of overseas and domestic oil and gas assets that includes large operations in Western Australia and the Cooper Basin, as well as critical energy infrastructure in the eastern states.
The proposal requires various regulatory approvals, and will be tested by the Foreign Investment Review Board (FIRB), which provides advice to the treasurer.
The takeover proposal marks the first major foreign investment test for the Labor government since re-election, and raises questions over whether such a deal would help or hinder Australia's energy needs.
'I welcome people expressing their view, I am unable to because I may have to make a decision on this at some stage. It would be a big decision. And I do intend to take the advice seriously and I don't intend to pre-empt it,' Chalmers told the ABC on Monday.
Matthew Haupt, a lead portfolio manager at Wilson Asset Management, said FIRB would focus on issues around domestic gas supply and infrastructure security.
'Ultimately it can be a captain's call from the treasurer,' Haupt said.
Analysts told Guardian Australia that FIRB will also consider Australia's robust trading relationship with the United Arab Emirates, which includes a bilateral free trade agreement, when assessing the deal.
However, the lack of an Australian partner in the consortium, such as a superannuation fund, will be a drawback.
The South Australian government has said it would deal itself into the approval process through its oversight of assets.
'There are levers available to the state government to ensure that the state has a say in this potential takeover, and our main objective will be to safeguard Santos jobs and retain its headquarters in SA,' the South Australian energy minister, Tom Koutsantonis, said.
'Legislation passed by this government ensures that ministerial approval is required for a change in the controlling interest of a licence holder.'
The consortium, led by a subsidiary of the Abu Dhabi National Oil Company, has sought to allay some fears by promising to maintain Santos' headquarters in Adelaide, and invest in operations to ensure domestic supplies.
'This will reinforce Australia's position as a responsible energy partner and contributor to domestic and regional energy security,' the consortium said in a statement.
The Labor government has supported a string of fossil fuel approvals early in its second term, headlined by its decision to give the green light to Woodside Energy's extension of the North West Shelf gas processing plant to 2070.
Shares in Santos surged on Monday by 11% on the takeover proposal to trade just under the $8 mark. Its shares were flat on Tuesday, but remain at elevated levels.
The share prices of most energy companies have lifted over the last few trading sessions amid fears the conflict between Israel and Iran could disrupt global supplies.