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The Guardian
9 hours ago
- Business
- The Guardian
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
Yahoo
17-06-2025
- Business
- Yahoo
‘Levers': Warning over Santos takeover
The South Australian government has warned that any takeover of domestic oil and gas giant Santos by the Abu Dhabi National Oil Company must preserve the state's economic interests, saying it has 'levers' it can pull as the UAE behemoth closes in on control. Santos, which was founded as the South Australia and Northern Territory Oil Search in 1954, has agreed to a $30bn takeover from ADNOC, announcing the 'indicative proposal' to the ASX on Monday morning. Under the deal, XRG, an ADNOC subsidiary, would acquire all of Santos' shares for a cash price of $8.89, which represents a 28 per cent premium on the $6.96 closing price of the company's stock before the announcement. Santos, headquartered in Adelaide, is a jewel in South Australia's corporate landscape, and the prospect of foreign control has already triggered a note of caution from the state's powerbase. The company's vast portfolio includes oil and gas fields in South Australia's Cooper Basin, Western Australia, the Northern Territory, Papua New Guinea and the US. In the three months to March 31 this year, Santos generated about $2bn in revenue. SA Premier Peter Malinauskas said he had spoken with XRG leadership on Monday morning. 'The state government's priority at all times is to ensure that South Australian jobs remain in South Australia and to maintain Santos' headquarters in Adelaide,' he said after the announcement. 'I spoke today with XRG who briefed me about their plans, and we welcome the opportunity to continue this positive engagement. 'Any judgments we make regarding this process will be made in the state's best interests.' The government has flagged recent changes to the Petroleum and Geothermal Energy Act as a key point of leverage. '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,' 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.' ADNOC will need to gain a multitude of approvals for the deal to go through, including from the Foreign Investment Review Board, the Australian Securities and Investments Commission, the National Offshore Petroleum Titles Administrator and from authorities in the US and PNG. Treasurer Jim Chalmers will ultimately have to give the deal his tick of approval following advice from the FIRB. 'I will listen very closely, if it comes to it, to the advice of the Foreign Investment Review Board, but I won't pre-empt that advice,' he said in an interview with the ABC on Monday. 'People will have a view. I welcome people expressing their view. I'm unable to because I have to make a decision on this at some stage.' XRG has now been granted exclusive 'due diligence access' to Santos' confidential information as it prepares for a final decision. In a statement, XRG said the bid supported its 'strategy and ambition to build a leading integrated global gas and LNG business'. XRG also said it intended to retain the Adelaide headquarters, the Santos brand and invest in Santos' growth and the development of its gas and LNG business. Alongside its operating assets, Santos boasts the $5.7bn Barossa gas project off Darwin in the Timor Sea, now 95 per cent complete, and the Pikka oil project in Alaska's North Slope. The first gas at Barossa is expected in the third quarter of 2025, while first production at Pikka is scheduled for 2026. Sign in to access your portfolio
News.com.au
17-06-2025
- Business
- News.com.au
South Australia issues warning to ADNOC over Santos takeover bid
The South Australian government has warned that any takeover of domestic oil and gas giant Santos by the Abu Dhabi National Oil Company must preserve the state's economic interests, saying it has 'levers' it can pull as the UAE behemoth closes in on control. Santos, which was founded as the South Australia and Northern Territory Oil Search in 1954, has agreed to a $30bn takeover from ADNOC, announcing the 'indicative proposal' to the ASX on Monday morning. Under the deal, XRG, an ADNOC subsidiary, would acquire all of Santos' shares for a cash price of $8.89, which represents a 28 per cent premium on the $6.96 closing price of the company's stock before the announcement. Santos, headquartered in Adelaide, is a jewel in South Australia's corporate landscape, and the prospect of foreign control has already triggered a note of caution from the state's powerbase. The company's vast portfolio includes oil and gas fields in South Australia's Cooper Basin, Western Australia, the Northern Territory, Papua New Guinea and the US. In the three months to March 31 this year, Santos generated about $2bn in revenue. SA Premier Peter Malinauskas said he had spoken with XRG leadership on Monday morning. 'The state government's priority at all times is to ensure that South Australian jobs remain in South Australia and to maintain Santos' headquarters in Adelaide,' he said after the announcement. 'I spoke today with XRG who briefed me about their plans, and we welcome the opportunity to continue this positive engagement. 'Any judgments we make regarding this process will be made in the state's best interests.' The government has flagged recent changes to the Petroleum and Geothermal Energy Act as a key point of leverage. '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,' 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.' ADNOC will need to gain a multitude of approvals for the deal to go through, including from the Foreign Investment Review Board, the Australian Securities and Investments Commission, the National Offshore Petroleum Titles Administrator and from authorities in the US and PNG. Treasurer Jim Chalmers will ultimately have to give the deal his tick of approval following advice from the FIRB. 'I will listen very closely, if it comes to it, to the advice of the Foreign Investment Review Board, but I won't pre-empt that advice,' he said in an interview with the ABC on Monday. 'People will have a view. I welcome people expressing their view. I'm unable to because I have to make a decision on this at some stage.' XRG has now been granted exclusive 'due diligence access' to Santos' confidential information as it prepares for a final decision. In a statement, XRG said the bid supported its 'strategy and ambition to build a leading integrated global gas and LNG business'. XRG also said it intended to retain the Adelaide headquarters, the Santos brand and invest in Santos' growth and the development of its gas and LNG business. Alongside its operating assets, Santos boasts the $5.7bn Barossa gas project off Darwin in the Timor Sea, now 95 per cent complete, and the Pikka oil project in Alaska's North Slope. The first gas at Barossa is expected in the third quarter of 2025, while first production at Pikka is scheduled for 2026.
ABC News
16-06-2025
- Business
- ABC News
SA government threatens to intervene in Santos foreign takeover bid
The South Australian government has threatened to intervene if a nearly $30 billion takeover bid for the state's largest company Santos is "not in the interests of South Australians". Santos told the stock exchange on Monday that it had received a takeover offer from a consortium led by XRG, the international investment arm of the state-owned Abu Dhabi National Oil Company. The consortium, which also includes US private equity firm Carlyle, intends to acquire all Santos shares at $8.89 per share — a nearly 28 per cent premium on its last closing price of $6.96. The offer values the oil and gas company at about $28.8 billion. The Santos board has indicated it intends to unanimously recommend shareholders vote in favour of the potential transaction in the absence of a better offer and subject to reaching a final agreement. The agreement is also subject to approval from the Foreign Investment Review Board, Australian Securities and Investments Commission and the National Offshore Petroleum Titles Administrators, as well as other authorities in Papua New Guinea and the US. Santos, founded in 1954 as South Australia and Northern Territory Oil Search, is South Australia's largest company and a top-20 company on the ASX. It has oil and gas assets in the Cooper Basin in far north-eastern South Australia, Gladstone in Queensland, and across Western Australia and Papua New Guinea. South Australian Premier Peter Malinauskas said XRG leadership briefed him about their plans on Monday morning. "We welcome the opportunity to continue this positive engagement," he said in a statement. XRG said it intended to maintain Santos's headquarters in Adelaide and its "brand, and operational footprint in Australia and key international operational hubs". The Abu Dhabi company also said it intended to "work closely with the existing management team to accelerate growth and support local employment and the communities where Santos operates". Energy and Mining Minister Tom Koutsantonis said having Santos headquartered in Adelaide was of "strategic and vital importance to the state". "We're going to fight to keep it here," he said. Mr Koutsantonis added that the takeover was "not a foregone conclusion". He said the state government recently passed legislation that "requires our consent for change of licence ownership in the resources sector". "We've got legislation which puts us at the table," he said. "That means we're going to use that legislation, and if the deal is not in the interests of South Australians, the South Australian government will say so and act accordingly. "If this deal is not in the interests of Australia … then the Commonwealth government will look at it and have a say. Santos's share price soared 12.3 per cent this morning to $7.82. But the rise was still well below the $8.89 bid price from the Abu Dhabi-backed consortium. XRG said on Monday that its takeover bid did "not amount to a firm intention to make a binding offer and there can be no certainty that an offer will be made or any transaction will proceed". The company said it wanted to "invest in Santos's growth and further development of its gas and LNG-focused business, which will provide reliable and affordable energy and low carbon solutions to customers in Australia, the Asia Pacific and beyond". It added that it would "ensure Santos remains a contributor to the transformation of energy systems" with investment in carbon capture and storage projects, low-carbon fuels and "the application of AI to drive efficiency and value across operations". The Santos board has agreed to give the XRG consortium access to confidential information to conduct "confirmatory due diligence", subject to an agreement. The company also intends to negotiate an exclusivity and confidentiality deed with XRG. "The Santos board confirms that, subject to reaching agreement on acceptable terms of a binding SIA (scheme implementation agreement), it intends to unanimously recommend that Santos shareholders vote in favour of the potential transaction," the company said. "The potential transaction is fair and reasonable and in the best interest of Santos shareholders." XRG's takeover bid follows two previous offers on March 21 and March 28 to take over the company at $8 and $8.60 a share respectively, according to Santos. It also follows merger talks between Santos and Perth-based global energy giant Woodside in 2023. Those talks concluded in February 2024.
