In a deal that could reshape Australia’s energy landscape, Santos – one of the country’s largest gas producers – is on track to be taken over by a consortium backed by Abu Dhabi’s national oil company and global private equity firm Carlyle. Valued at $30 billion, this proposed acquisition has sparked strong debate among politicians, industry experts, and the public.
This isn’t just a business deal. If approved, it would mean that a foreign state-owned entity gains control of critical Australian gas infrastructure – a situation raising eyebrows in Canberra at a time of heightened global energy insecurity.
What’s the Deal?
The takeover bid, lodged by a company called XRG (a joint venture between Abu Dhabi’s oil company, its sovereign wealth fund, and Carlyle), offers $8.89 per Santos share – a 28% premium over the company’s last closing price of $6.96.
Santos' board has responded positively so far. Pending a thorough review and a green light from an independent expert, the board has indicated it will unanimously recommend the deal to shareholders – unless a better offer comes along.
Importantly, this bid is still in the early stages and remains subject to due diligence. Regulatory approvals are also required, with the final call resting with Treasurer Jim Chalmers, who must take advice from the Foreign Investment Review Board (FIRB) before proceeding.
National Interest at Stake
The takeover has reignited discussion around foreign ownership of key Australian assets – especially in sensitive sectors like energy. Santos owns and operates a range of critical gas projects across the country and the wider region, including in Papua New Guinea, Timor-Leste, and Alaska. Back home, its assets include major operations in Gladstone and Western Australia, all of which play a central role in powering homes, industries, and exports.
Given the scale and strategic importance of Santos' infrastructure, the deal is likely to test the Albanese government’s resolve on foreign investment. Treasurer Jim Chalmers has acknowledged the significance of the proposed acquisition, describing it as “potentially a very large transaction” and stating he would consider FIRB’s recommendations seriously. However, he declined to comment further, citing his position as a potential decision-maker.
South Australia's Energy Minister, Tom Koutsantonis, also voiced concern – not in opposition, but in cautious oversight. Since Santos is headquartered in Adelaide, the South Australian government intends to scrutinise the proposal closely to ensure that the state’s interests, particularly jobs and local investment, are protected.
“There are levers available to the state government to ensure that the state has a say in this potential takeover,” Koutsantonis said, underlining the importance of maintaining Santos’ presence in SA.
A Global Energy Tug-of-War
The backdrop to this bid is a tense global energy market. Conflicts in the Middle East, tensions between China and the US, and Europe’s continued sanctions on Russia have all put pressure on supply chains and prices. In this environment, access to stable and secure energy resources has become more valuable than ever.
That’s why the Santos deal is about more than just dollars and cents. The gas projects under its control have long helped Australia extend its influence in the Pacific while contributing billions to neighbouring economies. If these assets move under foreign ownership, it could reduce Australia’s control over a strategically important sector.
Energy analyst Saul Kavonic from MST Marquee believes this could be one of Treasurer Chalmers’ most significant decisions yet.
“The possibility of a foreign government controlling Santos’ key gas assets at a time of heightened energy security would be a headache for Chalmers,” Kavonic said.
What About Jobs and Domestic Gas Supply?
Unsurprisingly, there are concerns about how this deal might affect Australian jobs, local operations, and the price and availability of gas at home.
XRG, for its part, has stated it intends to keep Santos' headquarters in Adelaide and maintain its existing operational footprint in Australia and abroad. It also plans to retain the Santos brand.
Still, there is speculation that FIRB could recommend carving out some of Santos’ critical infrastructure to protect national interests. Kavonic notes that this gives the Albanese government a rare opportunity to negotiate concessions, such as commitments to improve domestic gas supply – an issue that has plagued Australia for years.
“This is a huge opportunity for Labor to extract domestic gas concessions and remedy their failure to impose a gas reservation a decade ago,” Kavonic said.
In recent years, Australians have seen gas prices soar despite the country being one of the world’s biggest exporters. This deal could provide a chance to fix that – if the government plays its cards right.
Opposition Wants More Transparency
The federal opposition isn’t opposing the deal outright but is demanding clarity. Acting treasury spokesperson James Paterson and other Coalition shadow ministers released a joint statement urging the government to explain how the takeover aligns with Australia’s national interest.
“The Coalition will consider the details carefully as they emerge, but we believe national interest must be more than a checkbox,” the statement said.
Their concern echoes public sentiment: Australians want to know that vital national assets are being safeguarded, not simply sold to the highest bidder without regard for long-term consequences.
Market Reaction
On the Australian sharemarket, investors responded swiftly to the news. Santos shares surged nearly 11%, closing at $7.72, reflecting optimism about the proposed premium offer. Market chatter about a possible Santos acquisition has been swirling for more than a year. Previously, there were rumours about an $80 billion merger between Santos and Woodside, Australia’s largest oil and gas company, as well as interest from Saudi Aramco.
E&P Research analysts said the timing is ideal for the consortium. With energy prices remaining volatile and Santos approaching a new phase of cash generation following several completed growth projects, now is the time to buy.
Still, they warned that regulatory hurdles could derail the deal. For investors wary of the risks, E&P suggested considering Woodside instead, citing its stronger leverage to global oil prices.
What Happens Next?
The due diligence process is ongoing, and Santos has granted XRG access to confidential company data. This follows two previous bids from XRG – one in March at $8 per share and another shortly after at $8.60 – before the current $8.89 offer was put forward.
The coming months will be crucial. The government’s decision, shaped by FIRB’s advice and broader national interest considerations, could determine the future of Australia’s energy independence – and whether foreign investors will continue to see Australia as an open market.
For Australians, this isn’t just about a corporate merger. It’s about who controls the power that fuels our homes, businesses, and future.
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Mitchell
Mitchell is a seasoned Ph.D. scholar with extensive expertise gained through years of rigorous research, publication, and teaching experience. He brings a wealth of knowledge and analytical skills to tackle complex academic challenges. His work is dedicated to delivering innovative solutions, advancing knowledge, and promoting academic excellence. Proficient in research methodology, data analysis, and scholarly writing, Mitchell has contributed to peer-reviewed journals and mentored students to achieve academic success.
