Tom Koutsantonis says the government is monitoring merger talks between Santos and Woodside Energy ‘very closely’

Energy Minister Tom Koutsantonis says the government will be doing everything possible to maintain Santos’ presence and jobs in SA, as merger talks begin with Woodside Energy.

Kevin Gallagher, Chief Executive Officer and Managing Director Santos Limited. Picture: NCA NewsWire / Morgan Sette

South Australia risks losing the corporate headquarters of its largest company, Santos, which has confirmed merger talks with the much-larger resources firm Woodside.

The $80bn merger deal would create a global oil and gas giant, as fossil fuel producers bulk up as part of a wave of consolidation across the industry.

However, Energy Minister Tom Koutsantonis on Thursday night strongly warned Woodside against diluting the oil and gas firm’s Adelaide base.

“The first two letters of the name Santos stand for SA,” Mr Koutsantonis said.

He declared the state government a strong supporter of Santos, particularly its jobs and resources, and insisted any weakening of either would be “examined very closely”.

“The SA government has been very supportive of Santos, a company that employs 1000s of people and is headquartered here in SA,” Mr Koutsantonis said.

“We will do all we can to maintain and protect SA jobs and the headquarters.

“This is very early in this process, but we will be monitoring it very closely.”

Opposition Leader David Speirs said any suggestion that Santos could be moving interstate was “deeply concerning”.

“If Santos does merge with Woodside, Peter Malinauskas must assure South Australians he will fight hard to keep its headquarters here, because if it goes west that would be a huge economic blow for the state,” he said.

Santos told the ASX late on Thursday rumours about it being in talks with Woodside were correct.

Details of the progress of the merger talks, and crucially where any merger entity would be headquartered, are scant at this stage.

Santos managing director and chief executive officer Kevin Gallagher is based in Adelaide, working out of the company’s Flinders St headquarters.

Mr Gallagher received an unusual $6m “once-off growth projects incentive” in 2021 to deliver the oil and gas giant’s major projects to 2025, in a move that proved successful in keeping him out of winning Woodside Petroleum‘s top job, now held by Meg O’Neill.

Under a legal agreement struck in 2007, when the-then Labor premier Mike Rann lifted a 15 per cent Santos shareholder cap, a $100m compensation mechanism would be payable to the state government if the firm’s corporate presence in SA was significantly reduced.

Santos said in a statement it: “Confirms it has engaged in preliminary discussions with Woodside regarding a potential merger.”

“Santos continuously reviews opportunities to create and deliver value for shareholders.

“Concurrently, Santos is assessing a range of alternative structural options with a view to unlocking value as referred to on Santos’ investor day on 22 November 2023.

“The consideration of any merger is at an early stage and there is no agreement between the parties.

“There is no certainty that any transaction will eventuate from these discussions.

“Santos will continue to update the market in accordance with its continuous disclosure obligations.’’

Woodside reiterated Santos’ comments that the talks were in the early stages.

“Discussions remain confidential and incomplete, and there is no certainty that the discussions will lead to a transaction,” Woodside said in a statement.

“As a global energy company, Woodside continuously assesses a range of opportunities to create and deliver value for shareholders.’’

Santos is valued at $22.7bn while Woodside is worth $59.8bn.