Aramco, Adnoc consider takeover proposals for Santos

Saudi Aramco and Abu Dhabi National Oil Co. are separately evaluating potential takeover bids for Australia’s Santos Ltd., as the Middle Eastern energy giants seek to boost their gas investments overseas, people familiar with the matter said.

State-owned Aramco and Adnoc are conducting preliminary assessments of Santos as a potential takeover target, the people said, asking not to be identified because the information is private. Santos shares gained about 1 percent on the Sydney Stock Exchange in the year to Wednesday, giving the company a market value of A$24.9 billion ($16.7 billion).

Santos has developed liquefied natural gas projects in Australia, Papua New Guinea and Timor-Leste, which are valued for their proximity to rapidly growing Asian demand. It also has gas operations focused on the Australian domestic market, as well as conventional oil assets in Alaska.

Santos shares rose 5.2 per cent to A$8.08 a share, their highest intraday level since August.

Santos declined to comment. An Adnoc representative declined to comment, and an Aramco spokesman did not immediately respond to a request for comment.

Gulf countries are investing billions of dollars in gas, which is seen as an important bridge fuel in the energy transition. Qatar plans to nearly double its LNG export capacity, while Saudi Arabia and the United Arab Emirates are pouring money into domestic fields and building trading operations around the world.

In June, Aramco reached a preliminary agreement to buy a stake in the Sempra Texas LNG export facility in a deal that would include fuel deliveries from the project. The Saudi company struck its first deal to buy LNG from the United States that same month, signing a 20-year, non-binding contract to take 1.2 million tons of LNG per year from NextDecade Corp.’s planned project in Texas.

Adnoc has been pursuing a string of acquisitions that have made it one of the most active dealmakers in the energy sector. Last month, it began detailed negotiations for a potential takeover of German chemicals maker Covestro AG for 11.7 billion euros ($12.6 billion). In May, Adnoc acquired stakes in gas projects in the U.S. and Mozambique and has ambitions to expand its chemicals and trading operations globally.

Adelaide-based Santos could also attract interest from other potential buyers, the people said. Deliberations are ongoing, and the potential buyers have not decided whether to proceed with any proposals, the people said.

Santos has received several takeover offers in recent years. In 2018, Santos rejected multiple offers from U.S.-based Harbor Energy Ltd.

Woodside Energy Group Ltd. held preliminary talks to acquire Santos last year in a deal that would have created an LNG giant. Discussions collapsed earlier this year, and Santos said in February it would seek other ways to unlock shareholder value.

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