South Australia issues warning to ADNOC over Santos takeover bid

Santos is one of South Australia’s corporate jewels and the government has warned it has “levers” it can pull as a foreign oil behemoth moves in to take control.

The South Australian government has warned that any takeover of domestic oil and gas giant Santos by the Abu Dhabi National Oil Company must preserve the state’s economic interests, saying it has “levers” it can pull as the UAE behemoth closes in on control.

Santos, which was founded as the South Australia and Northern Territory Oil Search in 1954, has agreed to a $30bn takeover from ADNOC, announcing the “indicative proposal” to the ASX on Monday morning.

Under the deal, XRG, an ADNOC subsidiary, would acquire all of Santos’ shares for a cash price of $8.89, which represents a 28 per cent premium on the $6.96 closing price of the company’s stock before the announcement.

Santos, headquartered in Adelaide, is a jewel in South Australia’s corporate landscape, and the prospect of foreign control has already triggered a note of caution from the state’s powerbase.

The company’s vast portfolio includes oil and gas fields in South Australia’s Cooper Basin, Western Australia, the Northern Territory, Papua New Guinea and the US.

In the three months to March 31 this year, Santos generated about $2bn in revenue.

SA Premier Peter Malinauskas said he had spoken with XRG leadership on Monday morning.

Santos chief executive Kevin Gallagher at the Moomba carbon capture and storage plant in South Australia with Premier Malinauskas in the background. The South Australian government has expressed caution about the takeover of Santos. Picture – Supplied

“The state government’s priority at all times is to ensure that South Australian jobs remain in South Australia and to maintain Santos’ headquarters in Adelaide,” he said after the announcement.

“I spoke today with XRG who briefed me about their plans, and we welcome the opportunity to continue this positive engagement.

“Any judgments we make regarding this process will be made in the state’s best interests.”

The government has flagged recent changes to the Petroleum and Geothermal Energy Act as a key point of leverage.

“There are levers available to the state government to ensure that the state has a say in this potential takeover and our main objective will be to safeguard Santos jobs and retain its headquarters in SA,” Energy Minister Tom Koutsantonis said.

“Legislation passed by this government ensures that ministerial approval is required for a change in the controlling interest of a licence holder.”

ADNOC will need to gain a multitude of approvals for the deal to go through, including from the Foreign Investment Review Board, the Australian Securities and Investments Commission, the National Offshore Petroleum Titles Administrator and from authorities in the US and PNG.

Santos workers lay the petroleum liquids pipeline from the Cooper Basin to Port Bonython. The pipeline was built between 1980 and 1983. Picture: Santos.

Treasurer Jim Chalmers will ultimately have to give the deal his tick of approval following advice from the FIRB.

“I will listen very closely, if it comes to it, to the advice of the Foreign Investment Review Board, but I won’t pre-empt that advice,” he said in an interview with the ABC on Monday.

“People will have a view. I welcome people expressing their view. I’m unable to because I have to make a decision on this at some stage.”

XRG has now been granted exclusive “due diligence access” to Santos’ confidential information as it prepares for a final decision.

In a statement, XRG said the bid supported its “strategy and ambition to build a leading integrated global gas and LNG business”.

XRG also said it intended to retain the Adelaide headquarters, the Santos brand and invest in Santos’ growth and the development of its gas and LNG business.

Alongside its operating assets, Santos boasts the $5.7bn Barossa gas project off Darwin in the Timor Sea, now 95 per cent complete, and the Pikka oil project in Alaska’s North Slope.

The first gas at Barossa is expected in the third quarter of 2025, while first production at Pikka is scheduled for 2026.

Originally published as South Australia issues warning to ADNOC over Santos takeover bid