New $36 billion Santos takeover plan includes Darwin LNG plant

A key NT energy asset is caught-up in a $36 billion takeover bid that has caught the world’s eye.

A key piece of Northern Territory gas infrastructure could soon be owned by an overseas consortium if a proposed $36 billion corporate takeover is successful.

A consortium led by the Abu Dhabi National Oil Company subsidiary XRG wants to take over South Australian Company Santos, which owns the Darwin LNG plant and has extensive gas assets in the Beetaloo Basin.

Santos is supporting the $36 billion takeover, with a deal announced on Monday delivering shareholders an $8.89 return, compared to the original $8 a share offer launched in March.

Santos is a key employer in the Northern Territory with more than 300 on the job at Darwin LNG, which is currently being connected to the Barossa gas field after the depletion of reserves in the Bayu Undan field.

Santos’ Darwin LNG plant

If the takeover is successful, Darwin LNG in Middle Arm would be one of a number of Australian LNG assets captured, including Queensland’s Gladstone LNG plant.

Santos showed its commitment to the Northern Territory when it weathered a number of legal challenges to its $6.5 billion Barossa LNG project brought on by the Environmental Defenders’ Office.

In response, the Federal Court last year ordered the Environmental Defenders’ Office to pay Santos $9 million for its failed attempt to stop the Barossa. Project completion is expected within months and first gas flowing into Darwin LNG by later this year.

Santos also has investments in the NT’s Beetaloo Sub-basin gas precinct, which it paused for a number of years while it tried to finalise its Barossa project.

In a statement released on Monday morning, XRG said the takeover had the blessing of Santos’ board.

“The Santos Board has determined to provide XRG with access to confirmatory due diligence on an exclusive basis, subject to the parties agreeing the terms of a Process and Exclusivity Deed,” the statement said.

Santos chief executive Kevin Gallagher in January. Picture: Brenton Edwards

“The XRG-led consortium aims to build on Santos’ strong and longstanding legacy as a trusted and reliable energy producer, unlocking additional gas supply for Santos’ customers, and strengthening domestic and international energy security. The proposed transaction is aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business.”

XRG said while still only at the non-binding agreement phase, an aim of the takeover was to ensure “Santos continues to thrive as a business”.

To do this it would maintain Santos’ headquarters in Adelaide and “invest in growth and further development of its gas and LNG focused business (to) provide reliable and affordable energy and low carbon solutions ...”.

For its part, Santos has embraced the takeover bid.

“The Santos Board confirms that, subject to reaching agreement on acceptable terms of a binding SIA, it intends to unanimously recommend that Santos shareholders vote in favour of the potential transaction.

(This is) “in the absence of a superior proposal and subject to an independent expert concluding, and continuing to conclude, that the potential transaction is fair and reasonable and in the best interests of Santos shareholders.”

The takeover, which is believed to be the largest ever energy acquisition worldwide, will be subject to federal government approvals including from the Foreign Investment Review Board.

Originally published as New $36 billion Santos takeover plan includes Darwin LNG plant