ANALYSIS: Don’t be fooled: Santos takeover will gut SA’s last corporate giant

ANALYSIS: The Abu Dhabi bidder behind the $29bn bid for Santos is saying all the right things, but the reality is, a foreign takeover will diminish the last corporate heavyweight in SA.

Despite the Abu Dhabi bidder behind the near $30bn bid for oil and gas giant Santos saying all the right things, the reality is, a foreign takeover will significantly diminish the last corporate heavyweight left standing in South Australia.

Santos is a big fish in a small pond, and deeply embedded into the Adelaide corporate and economic bedrock – one of the few companies that attracts the best and brightest decision makers, not only in Australia but on a global scale.

It’s more than four times the size of Adelaide’s second biggest company, Argo Investments, which is largely run out of Sydney, and more than eight times the size of third placed Codan.

The Santos building in Adelaide’s Flinders Street. Photo: Morgan Sette

But it still pales in comparison to the deep pockets and grand ambitions of the state-owned Abu Dhabi National Oil Company, which is hoping to secure between 20-25 million tonnes a year of global LNG capacity by 2035, or four times’ the size of the Santos portfolio.

That means the high level decisions on where to invest in new projects and where to employ more staff will no longer be made from Flinders St, but in a skyscraper in the Emirati capital.

High level and decision making and high level jobs would move to Abu Dhabi if the sale of Santos proceeds.

Managing director Kevin Gallagher, who has been a dominant figure in decision making at Santos since taking the helm in 2016, will likely be one of the first to go given he’s been expected to step down for some time now, and he’s likely to be followed out the door by the seasoned executives closest to him.

The question then becomes how deep and how quickly do the new owners cut, where do they look to make savings, and which projects are brought into the firing line. And how many of Santos’ 1000-strong employees in SA will still have a job.

Santos’ Moomba gas plant. Picture: Brenton Edwards

Santos’ operations in the Cooper Basin could be used by the bidding consortium as a bargaining chip to win over the Foreign Investment Review Board, with speculation some of Santos’ domestic assets could be carved off and sold to another party – potentially consortium partner Carlyle – in order allay concerns about a state-owned foreign company taking over Australia’s critical assets.

Mining and Energy Minister Tom Koutsantonis has threatened to use new legislative powers as leverage in the negotiations in a bid to secure the “best interests of South Australians”.

He wants to keep the high paying jobs here.

But it is very hard to impose conditions that will meaningfully last for the decades’ long nature of major oil and gas projects.

If and when Santos is sold, South Australia will have lost the most important piece of its corporate identity.