Santos boss Kevin Gallagher says he is not surprised by interest from outside suitors such as MidOcean Energy in his Barossa gas project, amid market speculation the US private equity firm is keen to elbow into the $5.8 billion Timor Sea venture.

MidOcean, owned by EIG Partners, is known to be keen to build on its small position in Australian LNG. Several industry sources, speaking on the condition of anonymity because the talks are private, said it has sounded out buying the 12.5 per cent stake held by Japan’s JERA.