Abu Dhabi oil giant to sweat on Chalmers’ $30bn Santos call

One of the Middle East’s most powerful oil producers has swooped with a $30bn takeover offer for Santos, with any sale needing the Treasurer’s sign-off.

The Moomba gas plant owned by Santos. Picture: Brenton Edwards

A $30bn takeover of Australia’s second largest oil and gas company, Santos, by Middle East giant Adnoc faces a fight to clear a raft of regulatory hurdles, with Jim Chalmers saying he faced a “big decision” amid concerns over energy security and a national ­interest test.

Canberra’s willingness to sign off on the sale of critical energy infrastructure to Middle East investors looms as a major challenge for the Albanese government.

The all-cash deal revealed on Monday will be reviewed by the Foreign Investment Review Board – and then ultimately by the Treasurer – later this year.

“I welcome people expressing their view (but) I am unable to ­because I may have to make a ­decision on this at some stage,” Dr Chalmers told the ABC.

“It would be a big decision. I do intend to take the advice seriously and I don’t intend to pre-empt it.”

A raft of analysts nominated FIRB clearance as the major impediment to the deal getting the green light, given Santos’s role as a significant energy producer, and the precarious domestic gas industry on Australia’s east coast where supply shortages are forecast by 2028.

“FIRB approval may be a major risk to the deal given Santos controls significant critical ­energy infrastructure in Australia,” MST Marquee analyst Saul Kavonic said.

The Australian government rejected Hong Kong-listed CK Infrastructure’s $13bn bid for Australian gas pipeline giant APA Group in 2018 with then treasurer Josh Frydenberg citing ­national interest concerns.

In 2001, Peter Costello blocked a bid by energy company Shell to buy Woodside Energy.

The consortium, led by Adnoc investment unit XRG, will also need to sway locals, including South Australian Premier Peter Malinauskas, who said he had spoken with XRG leadership on Monday morning, and the state government would assess the proposal to ensure it was in the state’s best interests.

“The state government’s priority at all times is to ensure that South Australian jobs remain in South Australia, and to maintain Santos’s headquarters in Adelaide,” the Premier said. “I spoke today with XRG who briefed me about their plans, and we welcome the opportunity to continue this positive engagement.”

The SA government recently passed legislation that requires ministerial approval for any change in the ownership of petroleum exploration and production licences across South Australia.

Mining and Energy Minister Tom Koutsantonis said the new laws gave the state government leverage to have a say in the takeover negotiations.

“I think it’s fair to say my main concerns are the headquartered company remaining here in South Australia, and the jobs in the Cooper Basin and the jobs in the headquarters here,” he said.

“We’ve got legislation that puts us at the table. We’re going to use that legislation, and if its deemed that (the takeover bid) is not in the interests of South Australians, the South Australian government will act accordingly.

“Having a headquartered company here in South Australia is of strategic and vital importance to the state and we’re going to fight to keep it here.”

The federal Labor government may use the mooted takeover to extract domestic gas concessions for the east coast market, according to Mr Kavonic.

A commonwealth review of three major policies that regulate the east coast gas market started last week and includes unspecified government “initiatives” to boost domestic supply.

Santos’s own LNG facility, Gladstone LNG, has raised the hackles of its two competitors in Queensland because it buys gas from the domestic market to meet its export commitments.

Originally published as Abu Dhabi oil giant to sweat on Chalmers’ $30bn Santos call