AWU shapes as kingmaker in $30bn ADNOC, Santos deal: Macquarie

The fate of the $30bn offer for Santos could rest with the Australian Workers’ Union, according to investment bank Macquarie.

The Australian Workers’ Union is emerging as a key gatekeeper to the Albanese government’s approval of a near-$30bn takeover bid for Santos by Abu Dhabi’s state-owned oil giant, ADNOC, according to Macquarie.

In a note sent to clients from its Hong Kong sales desk, a senior Macquarie executive said Jim Chalmers faces political and personal risks in waving through the proposed acquisition without the AWU’s backing — underscoring the outsized role of the union in shaping the future of one of Australia’s largest oil and gas producers.

“There is also the perception by some that [Dr] Chalmers has ambitions to succeed Albanese as the next Prime Minister. [Dr] Chalmers not only needs the support from the AWU, but also needs to ensure that his reputation & track record cannot be smeared,” the note read.

“An approval by [Dr] Chalmers carries a lot of career risk given his political ambitions.”

Macquarie confirmed the authenticity of the note but said it reflected the personal views of the author, who was not named, rather than an official bank position.

“The email sent directly to a list of Asian-based institutional clients is the individual view of one Hong Kong-based salesperson and is not consistent with the view of the organisation, nor with Macquarie’s published research.” a spokeswoman for Macquarie told this publication.

Santos in June signed a conditional agreement with a consortium led by ADNOC in a deal that would see the Middle Eastern energy giant acquire the Adelaide-based company, subject to due diligence and regulatory approval. ADNOC now has just over a month to complete its review and lodge a formal proposal, placing the decision squarely in Dr Chalmers’ hands as Foreign Investment Review Board processes play out.

The AWU, a major player in the gas-rich regions of South Australia and the Northern Territory, has not publicly opposed the deal but has expressed concern about foreign ownership of strategic energy assets. The Macquarie analysis suggested the union’s support may ultimately hinge on whether ADNOC can offer credible commitments to protect local jobs and boost domestic gas supply — a key priority for energy-intensive manufacturers.

While ADNOC has promised to preserve Santos’ existing workforce and invest in local operations, its chances of winning political support could be complicated should it opt to retain chief executive Kevin Gallagher. The Macquarie note argued that any proposal involving Gallagher’s continued leadership could backfire, given longstanding tensions between the Labor government and the Santos boss.

The memo also suggested the deal may never reach FIRB if political opposition builds. It flagged the possibility that ADNOC and its partners may opt to walk away quietly if prospects for approval begin to dim.

“XRG may prefer to ‘save face’ rather than finding out a negative FIRB outcome. They could blame [due diligence] and note they are finding better value elsewhere without the political headache,” the report read. XRG is energy investment company of ADNOC.

The comments add to growing intrigue about how Canberra will handle the most significant foreign bid for an Australian energy company in more than a decade. Previous high-profile rejections — including China’s proposed acquisition of electricity network Ausgrid in 2016 — have placed FIRB under close scrutiny over national interest decisions involving critical infrastructure.

Originally published as AWU shapes as kingmaker in $30bn ADNOC, Santos deal: Macquarie