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Middle Eastern giants Saudi Aramco and ADNOC eye Santos for takeover bid

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By Colin Hay - 
Santos ASX STO Saudi takeover rumours

Leading Australian oil and gas producer Santos (ASX: STO) is once again rumoured to be in the crosshairs as a potential takeover target.

It seems that every year, the Australian energy company’s suite of oil and gas assets are rumoured to be on someone’s shopping list.

This time it is giant Middle Eastern petroleum producers Saudi Aramco and Abu Dhabi National Oil Co (ADNOC) that are reported to be eyeing Santos’ upside.

The right fit

According to a Bloomberg report, the Middle Eastern energy powerhouses are looking to increase their international gas exposure, with Santos reportedly fitting the model they are chasing.

Aramco – the national oil company of Saudi Arabia and one of the largest companies by revenue in the world – is definitely on a spending spree at the moment, revealing earlier this week that it had awarded contracts worth more than $37 billion to progress its strategic gas expansion.

The company is targeting sales gas production growth of more than 60% by 2030.

ADNOC, the state-owned oil company of the United Arab Emirates, is the world’s 12th largest oil company by production.

Market action

Santos has a current market cap of just over $26b, with the takeover rumours leading to an initial 6.1% share price rise to $8.16 before easing back to $8 in mid-afternoon Thursday trading.

Rumours of a potential Santos takeover erupted earlier this year after a proposed merger with Woodside was shut down.

That proposed amalgamation of Australia’s two leading oil and gas producers would have created an $80b company.

Diverse energy portfolio

Santos’ upstream gas and liquids business includes an Asian market-focused LNG business comprising three projects – Papua New Guinea LNG, Gladstone LNG and Bayu-Undan and Barossa to DLNG – and two Australian domestic gas businesses located on the west and east coasts.

It is currently progressing the Barossa project towards first gas production in the first half of 2025.

The company is also expected to make a final investment decision this year on the Dorado oil field off the Western Australian coast.

None of the reportedly involved parties have commented to date.