Australia an energy target as Iran-Israeli war triggers global turmoil

Sydney Morning Herald

3 days ago

It does not appear to be a coincidence that hours after Israel started raining bombs down on Iran, one of the embattled country's neighbours, Abu Dhabi, pounced with an audacious offer that Australian energy giant Santos could not refuse.
After making two offers over a week in March, the suitors are now putting $36 billion cash on the table, including debt, for one of our gas sector giants. If successful, it would be the largest ever cash offer in Australia's corporate history.
Abu Dhabi's state-owned oil company, the Abu Dhabi National Oil Company, the world's 12th largest oil company by production, is the major player behind the bid via its $US80 billion ($123 billion) overseas investment arm XRG.
This business was launched last year with a mission to meet rising global demand for lower-carbon energy and to become one of the five biggest integrated global gas and LNG businesses.
So why does a state, a part of the UAE, which is awash in oil, make such a huge bet on becoming a global LNG business?
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There are two core reasons: geography and the green energy transition.
The Israel-Iran conflict, and the threat of escalation if US President Donald Trump drags the US into it, will send global oil prices soaring for one key reason: any existential threat to Iran's leadership could lead to an effective blockade of the Strait of Hormuz.
It is a crucial choke point in the global energy supply chain, and not just for oil. Middle East LNG exports are even more reliant on the strait than is oil, and there are fewer alternatives to shipping LNG through the strait.