Aramco says Santos is not a target

Reuters

• Saudi Aramco refutes reports
• Australia’s Santos is LNG producer
• Adnoc could still be in the picture

Saudi Aramco has denied reports that it was considering a bid for Santos, Australia’s second-largest oil and gas producer.

In an emailed statement to Reuters, the Saudi oil giant said the information was inaccurate.

The UAE’s Adnoc told AGBI that the company has no “comments on this report”.

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Earlier this week, Bloomberg reported that state-backed oil companies Aramco and Adnoc were conducting preliminary studies to buy ownership stakes in the Adelaide-based business.

Santos has a vast liquefied natural gas business with projects in Australia, Papua New Guinea and Timor-Leste. The company produced nearly 92 million barrels of oil equivalent last year.

Adnoc and Aramco, the two Middle Eastern energy giants, are expanding their international LNG portfolios in an attempt to step up competition with global oil majors.

Gas, with about half the carbon emissions of coal, is a comparatively clean-burning fuel and is seen as crucial for Asia’s energy transition.

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Aramco aims to invest in LNG projects abroad after last year’s $500 million acquisition of a minority stake in US-based MidOcean Energy.

To bolster its overseas expansion strategy, the company initiated talks in June with Tellurian and NextDecade, two US LNG producers. It signed an initial agreement to buy a stake in Sempra’s Texas LNG export plant and for the supply of the fuel.

It also signed a non-binding heads of agreement with NextDecade for a 20-year LNG offtake deal from its Rio Grande facility.

In September it bought some minority stakes in Australian assets.

However, last month, Aramco lost out to UK rival Shell in its bid to buy Pavilion Energy, which would have given it access to gas markets in Europe and Asia.

Adnoc bought 11.7 percent in NextDecade’s Rio Grande LNG project in Texas in May and agreed to take 1.9 million tonnes per year of LNG from the plant. 

It also bought 10 percent from Portugal’s Galp in Area 4 in Mozambique, which contains the Coral South floating LNG plant and could eventually produce 25 million tonnes annually.

While Adnoc has developed an LNG business domestically and is expanding it with the latest decision to proceed with its Ruwais LNG project, Aramco has not developed any LNG facilities at home yet. However, Saudi Arabia plans to increase its domestic natural gas production by more than 60 percent and is considering building facilities.

But the UAE and Saudi Arabia face tough competition from their neighbour, Qatar, which will reach an LNG capacity of 142 million tonnes by 2030. QatarEnergy also has a 70 percent stake in Texas’s 18 million-tonne Golden Pass project.