Energy Giant ADNOC Eyes Global LNG Crown With $19B Santos Bid
Abu Dhabi National Oil Company’s investment arm XRG has submitted a AED 69.77 billion (approximately $19 billion) takeover bid for Santos, Australia’s second-largest gas producer. The all-cash offer sets Santos shares at AED 21.15 each, a substantial 28% premium over the company’s closing price before the announcement.
The Abu Dhabi giant made two previous confidential offers in March. XRG consortium offered AED 18.51 per share on March 21 and raised it to AED 19.90 on March 28. Santos rejected both earlier offers.
The consortium led by XRG has prominent financial partners – Abu Dhabi’s sovereign wealth fund ADQ and global investment firm Carlyle Group. They want to acquire 100% of Santos’ ordinary shares, with adjustments for any dividends declared or paid before implementing the proposal.
Santos’ board has shown support for the deal. The company stated, “Subject to reaching agreement on acceptable terms of a binding scheme implementation agreement, it intends to unanimously recommend that Santos shareholders vote in favor of the potential transaction, in the absence of a superior proposal”. This recommendation depends on an independent expert’s conclusion that the transaction is fair, reasonable, and serves shareholders’ best interests.
The consortium pledges to keep Santos’ headquarters in Adelaide and preserve its brand identity while maintaining its operational footprint in Australia and key international hubs. The XRG consortium plans to “work closely with the existing management team to stimulate growth and support local employment and the communities where Santos operates”.
The proposed acquisition lines up with XRG’s strategic ambition to build an integrated global gas and LNG business. The consortium plans to “build on Santos’s strong and longstanding legacy as a trusted and reliable energy producer, discover additional gas supply for Santos’s customers, and deepen domestic and international energy security”.
Deal positions ADNOC among top global LNG producers
ADNOC’s Santos acquisition is the life-blood of its bold plan to become one of the world’s top four liquefied natural gas (LNG) producers. ADNOC’s investment division XRG plans to create a gas and LNG business. They want to reach capacity between 20 million and 25 million tons per annum (mtpa) by 2035.
This game-changing deal would put ADNOC among global energy giants like Shell and ExxonMobil in LNG production and exports. The completion would place ADNOC behind Qatar Energy and Cheniere Energy. Qatar Energy produces 77 mtpa and plans to reach 160 mtpa by 2030. Cheniere Energy’s total production capacity is over 46 mtpa.
Santos brings valuable LNG assets to ADNOC. The Australian company sold 5.08 million tons of LNG in 2024. Papua New Guinea supplied more than 60% of this amount. This acquisition gives ADNOC control of two Australian LNG operations—Gladstone LNG and Darwin LNG. It also includes stakes in PNG LNG and the upcoming Papua LNG project.
ADNOC’s LNG presence would grow beyond its current operations. The company now produces around 6 mtpa of LNG and plans to increase capacity to 15 mtpa. The Ruwais LNG project received final investment approval in June. This facility will double ADNOC Gas’ current gross LNG capacity to over 15 mtpa by 2028.
The Ruwais project stands out with two electrically powered liquefaction trains. Each train processes 4.8 mtpa, making it unique in the Middle East and North Africa as the first to use clean grid power. The first train should start operating in late 2028. The second train will follow in early 2029.
ADNOC has built mutually beneficial alliances for Ruwais LNG. They’ve allocated 40% to energy leaders Shell, TotalEnergies, BP, and Japan’s Mitsui. Each company receives 10%.
The business logic makes sense. Santos’ assets give ADNOC solid access to Asian markets. This positions them to benefit from Shell’s prediction that global LNG demand will rise about 60% by 2040.
Regulatory approvals and national interest concerns emerge
The proposed acquisition must clear a complex regulatory approval process. Multiple agencies will examine the deal before completion. The AED 68.67 billion takeover needs clearance from the Foreign Investment Review Board (FIRB), Australian Securities and Investments Commission, National Offshore Petroleum Titles Administrator, PNG Securities Commission, PNG Independent Consumer and Competition Commission, and Committee on Foreign Investment in the United States.
FIRB approval remains the most important obstacle, especially when you have ADNOC’s state-owned status. MST Marquee senior energy analyst Saul Kavonic called this “a major risk to the deal” because Santos controls critical energy infrastructure in Australia. This level of examination dates back to 2001 when former treasurer Peter Costello blocked Shell’s AED 18.36 billion bid for Woodside based on national interest.
Australian Treasurer Jim Chalmers, who makes final decisions on major foreign transactions, stated: “I will listen very closely, if it comes to me, to the advice of the Foreign Investment Review Board, but I won’t pre-empt that advice”.
Australia’s energy security sits at the heart of regulatory concerns. The acquisition might increase foreign ownership of Australian energy assets and push for greater LNG exports. This raises concerns for eastern states. Analysts believe ADNOC might need to promise domestic gas supply guarantees, with Santos’ Narrabri project becoming “the flashpoint” for negotiations.
Notwithstanding that, several factors work in the consortium’s favor. Australia’s recent trade deal with the United Arab Emirates and XRG’s promises to keep Santos’ Adelaide headquarters, brand, and operational footprint stand out. The consortium plans to “work closely with the existing management team to accelerate growth and support local employment”.
South Australia’s government has made its position clear. Energy Minister Tom Koutsantonis said: “There are levers available to the state government to ensure that the state has a say in this potential takeover and our main goal will be to safeguard Santos jobs and retain its headquarters in SA”.
ADNOC’s financial strength could help address regulatory concerns. Its “deep pockets could pour money into Santos’ undeveloped assets” and fill expected gas supply gaps on Australia’s east coast.
Global Energy Landscape Changes With ADNOC’s Strategic Move
ADNOC’s bold $19 billion bid for Santos is a game-changing moment in the global LNG industry. This acquisition could push the Abu Dhabi energy giant into the same league as Shell and ExxonMobil among top LNG producers. The company’s latest offer comes with a 28% premium over Santos’ share price, after several rejected bids. This shows how committed ADNOC is to getting these valuable assets.
Australian regulators have some tough choices ahead. The Foreign Investment Review Board will get into how foreign state ownership of key infrastructure might affect national energy security. ADNOC might have to make strong promises about domestic gas supply, especially for Australia’s eastern states.
The strategy behind this move makes sense. Santos has a large LNG portfolio in Australia and Papua New Guinea that lines up with ADNOC’s target of reaching 20-25 million tons of LNG capacity by 2035. These assets are a great way to get access to growing Asian markets where demand keeps rising substantially.
Stakeholders from different regions will keep an eye on regulatory approvals. The deal faces some hurdles, but ADNOC’s promise to keep Santos’ Adelaide headquarters and support local jobs might help ease some worries. Whatever the outcome, this ambitious takeover bid explains the growing global race for LNG assets as energy companies prepare for future market needs.
