Is selling off Santos to a foreign buyer in Australia's national interest? First, define national interest
Amid the multifarious chaos of the past week, many of us might have missed the controversy over the proposed purchase of the energy business Santos by an overseas consortium. But the proposal is likely to create big problems for Australian governments and its resolution will reveal a lot about how Australian policymakers view energy and climate policy.
Santos is one of the largest and oldest Australian producers of oil and gas, second only to Woodside Energy (its name is an acronym of South Australia and Northern Territory Oil Search). The core of its operation is the Moomba gas field in the Cooper Basin, in the north-east corner of South Australia. The company now supplies gas to the entire eastern seaboard and has assets in the Timor Sea and Papua New Guinea.
The consortium proposing to buy Santos, called XRG, is owned by the Carlyle Group and the state-owned Abu Dhabi National Oil Company (Adnoc). Carlyle, named for the New York hotel where its founders met to set up the business, is one of the world's largest private equity companies, with close ties to what US President Eisenhower described as the 'military-industrial complex'. Its early years are described in Dan Briody's book The Iron Triangle.
Abu Dhabi is the wealthiest and most important of the United Arab Emirates. The value of its state-owned enterprises and sovereign wealth funds total over a trillion dollars. Abu Dhabi's wealth is derived almost entirely from oil and gas, so it is unsurprising to see its national oil company pursuing expansion through acquisitions like the proposed buyout of Santos.
Unsurprisingly the prospect of handing ownership of a large share of Australia's energy resources to buyers like these has raised concerns. Most commonly, these are expressed in terms of energy security or, more nebulously, national interest.
The issue of energy security can be dismissed pretty rapidly. Unlike the oil we import, the gas is physically located here. If we need it, we can keep it, regardless of the legalities of ownership, contracts and so on. At one time, perhaps, such an attitude might have raised concerns about sovereign risk, threats to future investment and so on. Foreign owners might have threatened us with action under Investor-State Dispute Settlement (ISDS) agreements. But the 'rules-based order' in which such concerns made sense, is largely a thing of the past, for good or ill. ISDS, in particular, is more or less dead. Even so, the government has shied away from fixing the absurdly unfavourable gas export contracts signed by Santos and others a decade ago.
Concerns about how the deal might affect our national interest are harder to address, mainly because Australian governments have no clear idea of what our national interest might be. It might be argued that we ought to be maximising the returns from our natural resources, while winding down fossil fuels, in line with the goal of achieving 'net zero' emissions globally by 2050. But there is no sign that Australian energy policy is motivated by such goals.
In fact, Santos has been a major player in the expansion of gas exports, notably of LNG from Queensland, and is pushing for even higher exports. The company has just received regulatory approval for the $5.8bn Barossa offshore gas project off the Northern Territory coast, described by critics as a 'carbon bomb'. The extra financial resources available to XRG might accelerate this.
What is in our 'national interest' is similarly incoherent in regards to tax revenue. Australia taxes its massive gas exports weakly, and it's hard to see how we would get a worse deal from a foreign owned company compared to an Australian one.
Sign up to Breaking News Australia
Get the most important news as it breaks
after newsletter promotion
Finally, neither Carlyle nor Adnoc can be expected to have any concern with the wellbeing of Australians. Carlyle, as a private company, is concerned with maximising its profits. Adnoc wants profits but also more influence over global markets. But it is a mistake to think that Santos cares any more, except about those Australians who happen to be shareholders, and who can expect a big payout if the takeover goes ahead.
John Quiggin is a professor at the University of Queensland's school of economics
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
26 minutes ago
- The Guardian
YouTube fires back at eSafety commissioner's push for platform's inclusion in under-16s social media ban
YouTube has criticised calls for it to be included in the under-16s social media ban, accusing the nation's online safety boss of ignoring parents and teachers. The eSafety commissioner, Julie Inman Grant, has urged the government to rethink its decision to carve out the video sharing platform from the minimum social media age which will apply to apps such as TikTok, Snapchat and Instagram. YouTube has said the government should stick by its draft rules and disregard Inman Grant's advice. 'Today's position from the eSafety Commissioner represents inconsistent and contradictory advice, having previously flagged concerns the ban 'may limit young people's access to critical support',' YouTube's public policy and government relations manager, Rachel Lord, said. Sign up for Guardian Australia's breaking news email 'eSafety's advice ignores Australian families, teachers, broad community sentiment and the government's own decision.' Inman Grant's speech to the National Press Club on Tuesday set out more details of the social media age limit – which she referred to as a 'delay' rather than a 'ban' – to come into force in mid-December. While there are still no details of how social media users would be age checked, she said Australians should expect 'a waterfall of tools and techniques', many likely to include artificial intelligence like analysing facial or hand features. Guardian Australia is aware several social media platforms have privately expressed concern about a lack of information about their obligations under the laws, and raised doubts they would be able to build such age assurance systems with less than six months until the deadline. Inman Grant indicated age verification would take place on individual platforms, rather than at the device or app store level, adding that many social media sites already used tools to estimate or verify users' ages. She said platforms would need to report their progress to eSafety, and demonstrate they were using tools to verify users and remove children. However Inman Grant also conceded systems would not be perfect: 'We know that companies aren't going to get it right the first time. None of these technologies are foolproof, but again, if they're using them in tandem with one another, they'll have greater levels of success.' 'While the social media delay will not solve everything, it will create some friction in the system … this world-leading legislation seeks to shift the burden of reducing harm away from parents and carers and back on to the companies themselves,' Inman Grant said. 'We are treating big tech like the extractive industry it has become. Australia is legitimately asking companies to provide the lifejackets and the safe guardrails we expect from almost every other consumer-facing industry.' YouTube had been pledged a carve-out by former communications minister Michelle Rowland, who listed it alongside Google Classroom and online services from ReachOut and Kids Helpline as being exempt from the ban because they help children 'get the education and health support they need'. Federal government sources said the communications minister, Anika Wells, would decide within weeks whether to take the commissioner's advice to amend the draft rules. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion YouTube maintained its service is about video distribution and watching content, not social interactions. Lord said YouTube had been a leader in building age-appropriate products and responding to threats, and denied it had ever changed policies to negatively impact younger users. YouTube said it removed more than 192,000 videos for violating its hate and abuse policies in the first quarter of 2025 alone, and has designed age-appropriate products specifically for young children. Lord said the government should not change course on exempting YouTube from the ban. 'eSafety's advice goes against the government's own commitment, its own research on community sentiment, independent research, and the view of key stakeholders in this debate.' The shadow communications minister, Melissa McIntosh, said the government must provide more clarity on the looming reforms. 'In or out, the government needs to make its position clear on the requirements for social media platforms and families to protect our kids from the vitriol that is so prevalent online,' she said. 'There are more questions than answers right now, including what verification technology will be required, which platforms are in or out and what constitutes platforms taking reasonable steps to implement social media age minimum standards by 10 December 2025.'
The Guardian
an hour ago
- The Guardian
Don't believe the hype: Victorian government deserves credit for not buckling to aggressive pro-gas campaign
It didn't go as far as previously flagged, but don't believe the negative hype about Victoria's plan to start weaning off gas: it is a significant step that will help drive households and businesses away from fossil fuels and cut energy bills. The Allan Labor government announced that gas heating and hot water systems will be banned in all new homes and nearly all new commercial buildings, including schools and hospitals, from 1 January 2027. They will not be connected to the state's gas network and will run on electric systems. New agricultural and manufacturing buildings, some of which use gas for high-temperature industrial processes, are excluded. Rental properties including public housing – a third of the housing stock – will have to move to electric appliances when existing gas heaters and water systems reach the end of their lives, starting from 1 March 2027. Owner-occupiers will have to make a similar shift, but only for hot water. Crucially, landlords will also have to do a range of energy efficiency work on their properties, including installing an efficient electric cooling system in main living areas – or a reverse-cycle air conditioner that both heats and cools – sealing leaky external doors, windows and wall vents, and making sure there is ceiling insulation. If properly implemented, these minimum standards will further cut bills and lead to homes being better temperature-regulated and healthier to live in. The logic for the move away from gas is straightforward. There are three main parts to it. Though still marketed as 'natural', and sometimes even as 'clean', gas is actually methane – a highly potent fossil fuel. It releases plenty of greenhouse gas when burned. The electricity grid is moving from being dominated by coal-fired power to renewable energy. Electric appliances are better for the planet and the people who live on it. It is a necessary part of getting to net zero emissions. Gas is expensive. Analysis has found electrification of appliances should save households nearly $1,000 a year on their energy bills. There are upfront costs in getting new systems, but the Victorian policy is not forcing people to change over until their existing system is dead, and offers rebates to help with the change. Victoria is running out of gas. For decades, it has relied on reservoirs in Bass Strait, but they are running low, and all potential new sources are expensive. The state government wants to install a 20-year floating liquified natural gas (LNG) import terminal near Geelong to make sure demand is met. It sounds ridiculous, but may be the least bad option available – after the most obvious one: reducing gas use as much as possible so that it is available for the few industrial processes that do not yet have viable alternatives. Victoria is Australia's most gas-reliant state, with about three-quarters of homes connected to the gas network, and there is a decent case that it could be going further. Labor shelved an earlier proposal to also require owner-occupiers to buy electric heaters when their gas heaters died. Gas cookers are not included at all. They can continue to be installed indefinitely. But the government deserves credit – and has been praised by advocates and some in industry – for not buckling to an at-times aggressive pro-gas PR campaign that has lobbied ministers and government staff and sought to sway the public. Australian Gas Networks-sponsored MasterChef Australia, which is shot in Victoria, ran advertisements that were found to include unsubstantiated claims about the potential for 'renewable gas' to replace fossil fuel gas in networks. The Herald Sun claimed to support net zero emissions commitments, but ran prominent advertorials sponsored by gas companies that neglected to tell readers that the fossil fuel is part of the climate problem. Some organisations, such as the Victorian Chamber of Commerce and Industry, suggested that the state should have instead just backed new gas extraction. The chamber's chief executive, Paul Guerra, continued his criticism on Tuesday, telling 3AW that the policy – which just imposes minimum standards most homeowners take for granted – was 'class warfare' against landlords. Sign up to Clear Air Australia Adam Morton brings you incisive analysis about the politics and impact of the climate crisis after newsletter promotion Others, such as the Australian Industry Group, were cautious but open. It welcomed the changes as 'pragmatic', and argued that over the next decade it could free up gas supply equivalent in scale to what would be extracted from New South Wales' Narrabri gas field over the same period. That the package got up is primarily due to the state's longstanding energy and climate minister, Lily D'Ambrosio, who designed and championed it. She won support from the plumbers' union, whose members install gas appliances. The final plan was backed by conservation organisations including Friends of the Earth and Environment Victoria, which said it showed the government was willing to put 'the interests of households and business owners ahead of wealthy gas corporations'. The head of the Victorian Council of Social Service, Juanita Pope, said the new rental standards were 'a major win' that would 'literally save lives'. The chief executive of the thinktank Rewiring Australia, Francis Vierboom, summarised: 'It's a BFD.' The chief executive of the Energy Efficiency Council, Luke Menzel, said while it was disappointing that the mandatory phasing out of gas space heaters in owner-occupied homes was dropped, the government should be applauded for making 'big, bold decisions' – and the rest of the country should be paying attention. 'It is a nation-leading reform,' he said. 'It is setting the pace for the other states.' It is also an assessment of what the government believes is politically durable. More will be needed. But it is a promising start. Adam Morton is Guardian Australia's climate and environment editor
The Guardian
an hour ago
- The Guardian
Antoinette Lattouf v ABC: federal court to hand down judgment on unlawful termination legal battle
A highly charged 18-month dispute over whether the ABC acted unlawfully when casual radio presenter Antoinette Lattouf was abruptly taken off air in 2023 will end on Wednesday when Justice Darryl Rangiah hands down his judgment in the federal court. Lattouf began hosting the ABC Sydney Mornings radio program on Monday, 18 December 2023. The next day she reposted a Human Rights Watch post reporting the Israeli military using starvation as a weapon of war in Gaza. After the program aired on Wednesday, Lattouf was called into a meeting and told she would not be hosting the final two mornings set out in her contract because of the post. Sign up for Guardian Australia's breaking news email The refusal of the ABC to allow Lattouf to finish her on air shifts sparked a legal fight which damaged the ABC's reputation and has already cost taxpayers more than $1m in external legal fees. The ABC's position was, and still is, that Lattouf's employment was not actually terminated as she was paid for the full five days – or, in their words, that 'her employment … ended by effluxion of time at the conclusion of the applicant's rostered shift on 22 December 2023.' Last June, the Fair Work Commission found she was sacked, paving the way for the unlawful termination case in the federal court. Lattouf's case is that the ABC dismissed her for reasons that included her race and political opinion. The court heard those opinions included her opposition to the Israeli military campaign in Gaza and her support of Palestinians' human rights. She also contends the ABC failed to comply with the provisions on termination in its enterprise agreement. At 10.15am Wednesday in a judgment that will be livestreamed on the federal court's YouTube account, Rangiah will reveal whether Lattouf's case succeeded, and if so, how much the ABC has to pay the journalist in non-economic loss for pain and suffering. She has asked for between $100,00 and $150,000. During the seven-day trial, which was live-streamed, a number of the ABC's top brass were called to give evidence about the events leading to Lattouf's sacking, including former ABC chair Ita Buttrose, former managing director David Anderson, chief content director Chris Oliver-Taylor and Sydney radio manager Steve Ahern. The ABC told the court it received multiple emails from members of a pro-Israel group that was critical of the broadcaster for hiring Lattouf, who had an active social media profile critical of Israel's actions. The ABC denied it was influenced by the email-writing campaign and said Lattouf was taken off air because she was advised 'not to post anything that could be perceived as controversial on your socials'. The court heard Anderson sent a late-night text to Oliver-Taylor after taking a deep dive into Lattouf's social media accounts. 'I think we have an Antoinette issue,' Anderson wrote on Monday night. Documents lodged with the federal court showed Buttrose sent six emails in rapid succession detailing complaints about Lattouf to Oliver-Taylor in the hours leading up to the casual presenter's dismissal. Lattouf's line manager, Elizabeth Green, told the court she felt pressure emanating from above from day one: 'There was pressure from the Monday to get rid of Ms Lattouf.' Buttrose told the court she did not pressure Anderson to take Lattouf off air even though she believed it was 'quite apparent' the journalist was an 'activist' in relation to the Israel-Gaza conflict. The ABC's multi-layered management structure and labyrinthine internal policies came under the microscope in court. Oliver-Taylor, who made the final decision to take her off air, told the court he 'confused' the ABC's social media, editorial and impartiality policies. The University of Sydney's professor of labour law, Shae McCrystal, says Rangiah has to decide whether the ABC contravened either or both sections 50 and 772 of the Fair Work Act. Section 50 says an employer must abide by the provisions of the staff enterprise agreement when terminating someone's employment, and section 772 says an employer can not terminate an employee on the basis of their race or political opinion. Lattouf's lawyers argued she was 'was dismissed in a way that did not comply with the provisions on termination within the enterprise agreement,' McCrystal told Guardian Australia. 'So the argument that Lattouf's lawyers have made is that the decision to terminate her employment was made for a reason, or reasons that include her race and or her political opinion. 'Once you make that allegation under the Fair Work Act, the onus then shifts to the employer to establish that it did not act for the reason so alleged. 'That's why you've got Buttrose and other senior ABC people testifying, because it came down to determining the reason she was terminated.' In final submissions, Lattouf's legal team said the court should find the ABC contravened the act and award her 'compensation for non-economic loss for hurt, humiliation, pain and suffering and the exacerbation of a psychiatric illness'. The ABC's final submission denies Lattouf's employment was terminated; that the enterprise agreement was contravened and that the decision 'was motivated to any degree by Ms Lattouf's political opinions, race or national extraction'.
