Regulatory roadblocks threaten to derail ADNOC’s proposed $30b takeover of Santos
Industry experts are already suggesting that the $30 billion takeover bid for Santos (ASX: STO) by global oil and gas giant the Abu Dhabi National Oil Company (ADNOC) is looking less likely to succeed.
While the Santos board has indicated it is willing to back the move, there is a growing feeling that the foreign offer won’t get past the many government and regulatory hurdles it will face.
Implementation of the takeover will need approval from Australia’s Foreign Investment Review Board (FIRB) and Securities and Investments Commission (ASIC), the National Offshore Petroleum Titles Administrator and numerous overseas bodies.
Difficult approval process
History has already shown that gaining approval from the Australian government alone will be very difficult.
In April 2001, then Australian Treasurer Peter Costello blocked Shell’s takeover of Woodside Petroleum, stating the $5b bid was not in the national interest.
Current treasurer Jim Chalmers is already seeking advice from the FIRB before deciding whether or not to approve the sale.
South Australian legislation
The South Australian government is already looming as a major impediment to the deal going through.
With Santos’ headquarters located in Adelaide, the SA government has welcomed ADNOC’s commitment to keep it there but also warned the takeover must benefit the state.
SA Energy and Mining Minister Tom Koutsantonis said having Santos headquartered in Adelaide is of “strategic and vital importance to the state”, noting the recent legislation that requires its consent for a change of licence ownership in the resources sector.
“That means we’re going to use that legislation, and if the deal is not in the interests of South Australians, the SA government will say so and act accordingly,” he said.
PNG interests
The acquisition would also require approval from several PNG regulatory bodies.
Santos holds significant interests in Papua New Guinea’s LNG sector, including stakes in the PNG LNG and Papua LNG projects.
The PNG government previously raised concerns over foreign ownership of key energy assets when Santos acquired Oil Search in late 2021.