Santos supports $18.7bn Adnoc consortium takeover bid

Australia gas producer Santos will “unanimously recommend” its shareholders vote in favour of an $18.7bn takeover from a consortium led by XRG, the Abu Dhabi National Oil Company (Adnoc) subsidiary, Abu Dhabi Holding Company, and global investment firm Carlyle.

Under the proposed takeover, the consortium will buy Santos shares in a cash offer price of $5.761.

Goldman Sachs and JB North & Co are acting as financial advisers to Santos, Rothschild & Co is acting as independent board adviser, and Herbert Smith Freehills Kramer is acting as legal adviser to Santos.

The move reflects XRG’s growing global aspirations and would provide it with access to Santos’ two Australian liquefied natural gas operations (Gladstone and Darwin) as well as interests in Papua New Guinea, where the Angore project in PNG’s Hela Province will deliver up to 350 million standard cubic feet per day.

The XRG board recently approved a five-year plan to scale international gas, chemicals and energy solutions. It is targeting 20 to 25 mtpa LNG capacity by 2035.

The proposed takeover will attract attention from regulators in Australia, where tensions continue between domestic and international gas supply, and there are broader market challenges.

A recent Wood Mackenzie report on the east coast found a combination of declining exploration activity, delayed investments, and an increasingly complex policy environment has undermined confidence.

“Gas remains a critical part of Australia’s energy mix, particularly as the country speeds up its transition to renewables and retires coal,” said Daniel Toleman, Research Director of global LNG at Wood Mackenzie. “However, recent policy interventions have disrupted market dynamics, creating a cycle of underinvestment that threatens the long-term affordability and reliability of gas supply.”

The research consultancy said unlocking new domestic gas supply is the most effective way to reduce emissions and lower energy prices in Australia. “However, this would require a shift in government policy and a willingness to make politically difficult decisions,” it states.

The deal may also reflect Santos’ broader CO2 capture potential.

Santos’ Moomba Carbon Capture and Storage (CCS) project was recently recognised at the Energy Council’s annual APAC Awards in Singapore.

The joint venture between Santos and Beach Energy took home the Energy Technology Company of the Year award.

Kevin Gallagher, Santos CEO and Managing Director, said the project has already stored 800,000 tonnes of CO2 since coming online in September last year, highlighting the potential of CCS to help achieve global decarbonisation targets.

“CCS has a critical role to play in Australia’s and the Asian region’s Net Zero future, and the success of our Moomba project is evidence of what this technology can achieve,” he said.

Natural gas company Tamboran Resources Corporation and Santos are working together to evaluate the potential expansion of Darwin LNG’s second train, which could increase its production capacity to approximately six million tonnes of LNG annually.