Australian regulators and politicians are weighing the implications of Abu Dhabi National Oil Co.'s $19 billion bid for Santos, one of the biggest foreign takeovers in the country's history. EnergyQuest CEO and former Santos executive Rick Wilkinson says maintaining domestic gas supply will be a top priority for Canberra.

Canberra

Abu Dhabi National Oil Co. (Adnoc) has made a $19 billion bid for Santos, marking one of the largest potential foreign takeovers in Australian history. The move comes amid growing interest from Middle Eastern energy companies in diversifying their global portfolios, particularly in stable markets like Australia. 

Australian regulators, including the Foreign Investment Review Board (FIRB), are closely examining the bid, with a focus on energy security and the maintenance of domestic gas supply. Santos plays a significant role in Australia's domestic gas market, especially on the east and west coasts. Experts note that while expansion of Australian LNG production is likely to be limited in the near term, ensuring proper management and investment in existing assets will be a priority for authorities.

Adnoc's $19B Santos bid tests Australian energy path

timing of all this coincided with the conflict ongoing still in the Middle East. How much is the geopolitical uncertainty and instability in the region has to do with how much outreach we're seeing from energy giants in that part of the world to places like Australia for assets? Well I think we are going to see and we already are seeing an interest from the Middle East as they as they spread the global outlook of the company so we've seen that with AdNoc and we're also seeing it with Aramco in Saudi Arabia so it's a very natural once you get to a certain critical mass that you look to take some of the global instability out of the portfolio. Does external or sort of removed LNG assets remove that choke point risk for the Middle East players? Certainly it does. Australia is the second largest LNG exporter so having a portfolio like you have for Santos which has LNG not just in Australia but also in PNG with a great line of sight to the Asian markets that are emerging so it's a great fit for someone who's actually stepping into a more global LNG portfolio. How does this play out when it comes to FERB which of course has a pretty big history of blocking takeover bids from state-owned entities particularly if we're looking at you know a part of the world that has so much political and potentially governance volatility at the moment? Yes that's the important step when you make an investment in Australia the Foreign Investment Review Board which ultimately reports to the Treasurer so while it's an analytical report it also plays into the political arena as well and so top of mind will be infrastructure and energy security for the country so those are extremely important things to consider. When you look at Santos itself it doesn't look like it's that big it's only about three percent of Australian production when you account for all of the LNG production that's available but on a domestic gas side it's much more important it's seven to eight percent of the east coast and as much as twenty percent on the west coast. Most of those producing assets are extremely mature late life they're hard to add to or expand and so what the government what the FERB will be liking to see that the move of ADNOC into Australia will make sure that those assets are properly produced out and of course abandoned and taken care of from an environmental point of view but certainly the investment necessary for new gas to come on and Santos' portfolio extends up to the northern territory where they have shale gas potential and then there's other plays that might be possible around the Cooper Basin such as deeper coals, granite wash that are going to bring on gas to replace those declining fields. Rick I just wanted to quickly ask you you know as Heidi was kind of alluding to in the earlier point how much do you think Australia energy producers are going to be capitalizing on you know the need for diversification globally when it comes to supplies. Is there a sense of a level that we can expect more production? Well that's going to be a balance of course of how much support comes from the government to expand and move into those areas. As you know we all have quite aggressive net zero carbon targets so there's mixed signals that come particularly from the southeast corner of Australia where they're very aggressively chasing net zero targets and transitioning to renewables. So the ability for Australia to expand and step into and meet that new demand potentially for gas or even oil from the Middle East and give that diversity is somewhat limited. So it's going to be a slow game. I don't see Australian LNG making great expansion in the near term. It'll be producing out assets, a more brownfield expansion where they're adding on fields to existing LNG structures. An example of that is Darwin LNG where the Brosser field is a backfield into Bayou Undone and they're looking at Scarborough coming into the northwest shelf. The only potential long-term LNG expansion is Browse. So somewhat limited as to how quickly we could step into any great movement.

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Kyiv

Ukraine Invasion

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Jerusalem

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Manhattan

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Iran Strikes

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