Oil company ADNOC pulls out $18.7 billion acquisition bid for Santos
In a surprising turn of events, the Adnoc-led consortium, comprising Adnoc's subsidiary XRG and private equity firm Carlyle, has withdrawn its $18.7bn offer for Australian gas company Santos. This decision, announced recently, has stirred up the global oil and gas industry, which is currently grappling with various challenges.
The withdrawal comes after a lengthy due diligence process, during which concerns were raised about several aspects of Santos' operations. According to Josh Runciman from the Institute of Energy Economics and Financial Analysis, there may have been additional concerns about Santos' domestic operations, as well as its assets and emissions.
Moreover, the industry is facing a looming LNG supply glut, and the demand in mature, less price-sensitive markets is declining, as per Josh Runciman's analysis. This has made access to capital a significant issue, and it seems the consortium's key contract with Kogas at the Gladstone LNG facility, set to expire in 2031, may not be easily extended in the current market climate.
The Gladstone LNG plant is operated by Santos Ltd., and the company owns part of the facility. The key contract with Kogas has been a significant source of revenue for Santos, but with the withdrawal of the Adnoc offer, the future of this contract, and indeed, the company's overall prospects, remain uncertain.
Questions have also been raised domestically in Australia about whether the Adnoc bid was in the national interest. This is not an uncommon concern in the context of foreign investments in strategic sectors like energy.
The Adnoc consortium was reportedly targeting Santos to pursue its LNG portfolio, but the withdrawal of the offer has left markets surprised. It is worth noting that most of the lower cost reserves have been developed, and the global oil and gas industry is facing headwinds, as per Josh Runciman's observations.
For gas professionals keen on understanding the growth trajectory and commercial potential of countries in the industry, the Country Pulse series provides a clear lens. Reports on Australia and New Zealand are available now on the website. Despite the current challenges, the industry continues to offer opportunities for those who can navigate its complexities.
