Saudi Aramco and UAE national oil business consider bids to buy Santos

Saudi Aramco and Abu Dhabi National Oil Co have been separately studying potential bids for Australia’s Santos, as the Middle Eastern energy giants seek to ramp up their gas investments overseas, people with knowledge of the matter said.

State-owned Aramco and Adnoc have been conducting preliminary evaluations of Santos as a possible acquisition target, the people said, asking not to be identified because the information is private.

Shares in Santos have gained about 1 per cent in trading this year, giving the company a market value of $24.9 billion.

Santos has liquefied natural gas projects in Australia, Papua New Guinea and Timor-Leste that are prized for their proximity to fast-growing demand from Asia.

It also has gas operations focused on the Australian domestic market — including in Western Australia — as well as conventional oil assets in Alaska.

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 LNG export capacity, and Saudi Arabia and the United Arab Emirates are pumping cash into domestic fields and building trading operations globally.

Aramco in June reached an initial agreement to buy a stake in Sempra’s Texas LNG export plant in a deal that would include fuel shipments from the project.

The Saudi firm made its first deal to purchase LNG from the US in the same month, signing a 20-year non-binding contract to take 1.2 million tons per year of LNG from NextDecade Corp’s planned project in Texas.

Adnoc has been pursuing a string of acquisitions that have turned it into one of the energy industry’s most active dealmakers.

It entered detailed negotiations last month over a potential $US12.6 billion takeover of German chemical producer Covestro AG.

In May, Adnoc picked up stakes in gas projects in the US and Mozambique and has ambitions to expand in chemicals and trading operations globally.

Adelaide-based Santos could also attract interest from other potential buyers, the people said.

Deliberations are ongoing, and the suitors haven’t decided whether to proceed with any proposals, the people said.

A representative for Adnoc declined to comment, while a spokesperson for Aramco didn’t immediately respond to a request for comment.

A representative for Santos couldn’t immediately be reached outside regular business hours in Australia.

Santos has received several takeover approaches in recent years. In 2018, Santos rejected multiple offers from US-based Harbour Energy.

Woodside Energy had held preliminary talks on an acquisition of Santos last year in a deal that would have created an LNG giant.

The discussions broke down early this year, and Santos said in February it would look for other ways to unlock shareholder value.

- with assistance from Michelle F. Davis and Matthew Martin.