Saudi Aramco, ADNOC Group reportedly weigh bids for Santos

Saudi Aramco and ADNOC Group have been separately considering bids for Australian liquefied natural gas (LNG) producer Santos as the GCC energy giants seek to ramp up their gas investments overseas.

Sources told Bloomberg that state-owned Aramco and ADNOC have been conducting preliminary evaluations of Adelaide-based Santos as a possible acquisition target. The sources said Santos could attract interest from other potential buyers, according to the report. Deliberations are ongoing, and the suitors have not decided whether to proceed with any proposals, it added.

Founded in 1954, Santos has LNG projects in Australia, Papua New Guinea, and Timor-Leste that are prized for their proximity to fast-growing Asian demand. The company also has gas operations focused on the Australian domestic market and conventional oil assets in Alaska.

The energy firm’s market capitalisation was $16.74bn (AUD24.9bn) as of July 4, 2024, up 1 per cent from the start of the year.

GCC countries’ significant investments in gas, which is increasingly viewed as a crucial bridge fuel in the energy transition, have the potential to bring about substantial growth and change to the global LNG market. With Qatar planning to double its LNG export capacity and Saudi Arabia and the UAE investing in domestic fields and global trading operations, the energy landscape is set for a significant shift.

Meanwhile, Aramco and ADNOC are expanding their respective LNG portfolios at a time when global demand for gas has surged, particularly in Europe, which is replacing reduced pipeline supplies from Russia.

In June, Aramco signed non-binding agreements with two US energy firms, Sempra and NextDecade, for the supply of 5 million tonnes per annum (mtpa) and 1.2 mtpa LNG, respectively, for 20 years. The state-energy giant forayed into the global LNG market last September with the acquisition of a minority stake in EIG Partners’ MidOcean Energy in a deal valued at $500m.

Similarly, ADNOC has been pursuing a string of acquisitions that have made it one of the energy industry’s most active dealmakers. The UAE energy giant acquired stakes in gas projects in the US and Mozambique in May, and has ambitions to expand into chemicals and trading operations globally.

Last month, the company entered detailed negotiations over a potential $12.6bn (EUR11.7bn) takeover of German chemical producer Covestro.

Read: Saudi Aramco, UAE’s ADNOC in talks to invest in US LNG projects