Latest news with #Adnoc
RNZ News
2 days ago
- Business
- RNZ News
Papua New Guinea welcomes UAE-backed takeover of Australian oil and gas giant
Santos is one of the largest and oldest Australian producers of oil and gas. Photo: Facebook / Santos Ltd Papua New Guinea has expressed excitement about the prospect of Dubai-owned investment firms taking over Australian oil and gas giant Santos Limited. Santos, one of the largest and oldest Australian producers of oil and gas, is facing a takeover by a consortium run by Dubai-owned XRG, with a bid of more than US$36 billion. XRG is a subsidiary of the Abu Dhabi National Oil Company (Adnoc), which is owned by the state of Abu Dhabi, United Arab Emirates (UAE). According to the Australian Financial Review , "Santos is a major Australian oil and gas company. Domestically, it is the second-biggest supplier of gas to Western Australia and has been a long-term operator of the Moomba gas processing hub in South Australia, a facility central to east coast gas supply for more than 50 years." The firm has a footholding in the PNG Liquified Natural Gas (LNG) field across Hides, Juha and Angore, as well as the P'nyang field in the Western Province. PNG's international trade minister Richard Maru told The National that the acquisiton represents a "major vote of confidence" in Papua New Guinea's economic potential. "We have potential for more exploration and we need competition in the oil and gas sector, hence, this development is both timely and strategic," he was quoted as saying by the news outlet. "However, while we welcome them, we must make sure that this transaction is in line with our national interest as per Section 277(6) of the Capital Market Act 2025." Papua New Guinea Minister of National Planning, Richard Maru, in Wellington, 1 May 2018. Photo: RNZ / Johnny Blades Maru said that the employment of Papua New Guineans, of which Santos currently employs around 700, according to a news report from 2023. According to the Santos 2024 annual report, the firm generated $2.5b in revenue from PNG operations, and an EBITDAX (Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration) performance of around $2b. For oil and LNG, Santos' PNG operations yielded the greatest production level (39.5 million barrels of oil equivalent) at the lowest cost ($6.47 per barrel of oil equivalent) In terms of EBITDAX, PNG makes more than Santos' Australia and Timor Leste operations combined (about $1.7b). Santos' assets in PNG also hold more proved plus probable reserves of gas (2,567 PJ) than their Australian and Timor Leste assets.
The National
2 days ago
- Business
- The National
UAE and Chinese officials seek to boost co-operation in various sectors
Bolstering co-operation between the UAE and China in energy, renewables, infrastructure and other areas was on the agenda on Thursday during a series of official meetings in Beijing. Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnoc's managing director and group chief executive, took part in the visit to China, where he met Lan Fo'an, China's Minister of Finance, as well as other Chinese officials and company executives. According to UAE state news agency, Wam, liquefied natural gas, petrochemicals and strategic shipping were among the topics discussed as the two countries sought to enhance partnerships. The recent meeting came several months after Adnoc signed the UAE's largest LNG supply agreement with various Chinese companies. In recent years, ties between the UAE and China have been on the rise as the Arab world's second-largest economy continues to diversify and grow. As of 2024, China was the UAE's largest trading partner, with more than $100 billion in total bilateral trade. Thursday's series of meeting between Dr Al Jaber and Chinese officials and business leaders also touched on both countries' shared interest in advancing industrial and technological partnerships that support sustainable development, enabling knowledge transfer and boosting global competitiveness, Wam reported.
Mint
4 days ago
- Business
- Mint
Here's New Delhi's game plan to solve the Hormuz riddle
New Delhi is activating an emergency playbook to safeguard its oil supplies, as a fragile truce prevails in West Asia after 10 days of conflict. The strategy involves bypassing the critical Strait of Hormuz in Iranian waters via two pipelines; tapping into the global reserves and portfolios of Abu Dhabi National Oil Co. (Adnoc) and Saudi Arabian Oil Co. (Saudi Aramco); and significantly increasing imports from the US. The two pipelines, which run east to west across the Arabian peninsula, may be tapped if Iran closes the Strait, a choke point vital for global energy supplies. The first is Adnoc-operated 360-km Habshan-Fujairah strategic oil pipeline with a 1.5 million barrels per day (mbpd) capacity that opens to the Gulf of Oman; and the Saudi Aramco-operated 1,200-km East-West crude oil pipeline with a 5 mbpd capacity that offers access to the Red Sea. State-run refiners Indian Oil Corp. (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) are in touch with suppliers Adnoc and Saudi Aramco to use the pipeline route in case of an emergency, the people cited above said on the condition of anonymity. The shaky ceasefire between Israel and Iran is keeping markets on edge, even as Indian officials express confidence in securing supplies, albeit with potential pricing shifts. After US president Donald Trump declared a ceasefire, Israel accused Iran of breaking it, a claim denied by the latter. Also read | Mint Primer: Oil shock looms as Iran threatens to shut Strait of Hormuz. What it means for India Queries sent to the spokespersons of India's petroleum and natural gas ministry, Adnoc, Saudi Aramco, Embassies of UAE and Saudi Arabia in New Delhi, Indian Oil Corp., BPCL, and HPCL on Tuesday early morning remained unanswered. A US Embassy spokesperson in New Delhi directed questions to the Indian government. Strategic importance The plan is of strategic importance to India, given that out of the 5.5 million barrels of crude oil that India consumes daily, about 1.5-2 mbpd crosses the Strait of Hormuz. To be sure, the Strait, through which a fifth of the world's oil cargoes passes, remained open even during the years-long Iran-Iraq war in the 1980s. 'Given that India gets a significant portion of its imported oil through the Strait of Hormuz, getting a Plan B is of utmost importance. It needs to be seen what quantum the pipelines would be able to transport, as the quantum supplied on vessels through the sea route is huge. India will have to look at a host of options." said C. Uday Bhaskar, director, Society for Policy Studies. Given India's dependence on imported crude and the fact that oil comprises about 30% of its total imports (import bill), volatility and elevated prices impact the trade deficit, current deficit and eventually, economic growth. Last week, an Icra report said that for every $10/bbl increase in the average crude oil price in afiscal, net oil imports will rise by $13-14 billion in that year. Read this | US attack on Iranian nuclear sites roils oil market, India braces for possible price surge Kabir Taneja, deputy director, strategic studies at Observer Research Foundation said: "India has good relations with both Saudi Arabia and the UAE, and securing more oil would not be a problem; however, transportation is key. And such talks are of strategic importance given that India is heavily dependent on hydrocarbon imports and needs to ensure energy security. India has handled such situations well in the past and should be able to navigate any supply crunch scenario." Price changes Indian stock markets ended marginally higher on Tuesday after an initial surge. The BSE Sensex closed at 82,055.11 points higher by 158.32 points or 0.19% from its previous close. 'We are sorted on supplies and there might be some displacement in pricing. Supplies can also come through the Suez Canal and Cape of Good Hope. Then, there are the opportunistic cargoes on the high seas. Iran also needs to keep the Strait of Hormuz open as they don't have any other exit for supplying to China, its main and only buyer," one of the two people cited above said. Iran currently produces about 3.3 mbpd of crude oil, and exports 1.8-2.0 mbpd. It is yet to act on its threat of closing the strait, a development that could block a fifth of the world's oil cargoes and send oil prices into a spiral. 'A worst-case scenario would be Iran disrupting shipping lanes along the Strait. However, Iran is heavily dependent on the Strait, and this act could impact neighbouring oil producers and global consumers," J.P. Morgan Asset Management wrote in a 16 June report. Also read | US strike on Iran raises oil shock, capital flow risks for India's economy However, while India is sorted on supplies, there are concerns on pricing. Crude oil surged to nearly $80 per barrel amid the latest Israel-Iran conflict, before easing on Tuesday after the ceasefire news. At the time of writing the story, the August contract of Brent on the Intercontinental Exchange was trading at $68.96 per barrel, lower by 3.55% from its previous close. Similarly, the August contract of West Texas Intermediate on the NYMEX fell 3.37% to $66.20 per barrel. 'Presently, none of India's crude oil supplies comes through Fujairah located on the Gulf of Oman. It's (Habshan-Fujairah) a strategic pipeline that they will open. Our state-run refiners have already spoken to Adnoc," said one of the two government officials cited above, requesting anonymity. New options Experts said discussions to use the pipelines may open up new options for India. Gaurav Moda, partner and leader for energy with EY-Pantheon India said: "Such engagements will open up avenues for strategic and closure partnership of India with major oil suppliers like Saudi Aramco and Adnoc. Both these companies will see India, not just as a buyer of oil but also as a strategic partner." With a growing presence in India's energy security architecture, Adnoc is the only company to commit to India's strategic crude oil reserve programme to date, and supplied oil worth $13.86 billion in FY25 to India. Meanwhile, Saudi Aramco is India's third largest crude oil supplier, and sold oil worth $20 billion in FY25 to India. Saudi Aramco also has plans to collaborate on establishing two oil refineries in India; with Saudi Arabia's plan to invest $100 billion in India in sectors including energy, petrochemicals, infrastructure, technology, and fintech. Also read | Aramco's VC arm in talks for India team 'Saudi Aramco will get it through the Red Sea. Our Russian oil supplies also come through the Red Sea route. Our state-run companies have already spoken to them, and a plan is already in place in case the worst-case scenario of Iran closing the Strait of Hormuz ever plays out," one of the two people cited above said on the condition of anonymity. India imports around 244 million tonne of crude oil annually, accounting for over 85% of its total crude oil imports. These imports are split between long term oil crude oil contracts and spot cargoes in a 60:40 ratio. Global reserves 'Most of these companies including Saudi Aramco have their petroleum reserves all over the world including in Japan, Singapore and South Korea. In the event of the Strait of Hormuz getting closed; the replacement barrels will come from there," the official said, adding talks to access them in emergency have already take place. On Tuesday, India welcomed the ceasefire between Israel and Iran, adding it is ready to play its part in the efforts to bring peace and stability in West Asia. "While we remain deeply concerned about the prospects for overall and sustained regional security and stability, we welcome reports of a ceasefire between Iran and Israel and the role played by the US and Qatar in bringing it about," a statement from the external affairs ministry said. "We wish to reiterate that there is no alternative to dialogue and diplomacy in order to address and resolve the multiple conflicts in the region. India stands ready to play its part in these efforts and hopes that all concerned parties will work towards sustained peace and stability," it added. Also read | Spot freight rates could surge further if Iran shuts Strait of Hormuz India has been working on Plan B for energy security since Israel's attack on Iran on 13 June. India's top crude oil suppliers from the region are Iraq, Saudi Arabia, UAE, Kuwait, Oman and Bahrain, which account for about half of India's total supplies. 'This planning has taken place since Israel's the first set of attacks on Iran. The contingency measures were put in place immediately when Israelis struck Iran," the person cited above said. Eyes on America The rest of the supplies that India needs will come from the US, the official said, as India buys more oil from the US. India imported 3.7 million metric tonnes (mmt) of crude oil from the US in the April-June quarter (as of 24 June), against 2.7 mmt a year earlier. India's total energy imports from the US was 10.5 mmt in 2024-25, with energy security gaining importance in the India-US relations matrix. 'Crude oil imports from the US will reach almost 4 mmt in the first quarter, given that some cargoes are still on the way and the month of June is yet to end. And these volumes will go up," the person added. Analysts say diversifying import sources after the Russia-Ukraine conflict, which at its peak in 2022 led to multi-year high prices of oil, will help India mitigate a crisis situation. India has the option of sourcing crude oil from 39 countries. War premiums Meanwhile, shipping freight spot rates are up 150% since the start of the Israel-Iran war, and war risk premiums are expected to increase further. The daily freight rates of each tanker and vessel from West Asia to Japan and South Korea have increased to $50,000 from $20,000 about 10 days ago. 'The war premium will go up. Generally, insurance used to be 0.01% of the cargo, and technically, doesn't cover force majeure and war. There will be an extra charge and a fee of escorting the vessels through the Red Sea crisis, given the danger of Houthi attacks. The costing can go up," the official added. 'The Israel-Iran conflict poses risks to global energy supply disruptions and has led to a modest jump in oil prices thus far. If the situation escalates, such as blockades around the Strait of Hormuz, the risk premium in oil prices could rise further," the J.P. Morgan Asset Management report said. For now, the sentiments in the market have eased with the announcement of ceasefire. And read | Israel-Iran ceasefire takes the pressure off crude prices, but not Indian OMCs
The Guardian
4 days ago
- Business
- The Guardian
Is selling off Santos to a foreign buyer in Australia's national interest? First, define national interest
Amid the multifarious chaos of the past week, many of us might have missed the controversy over the proposed purchase of the energy business Santos by an overseas consortium. But the proposal is likely to create big problems for Australian governments and its resolution will reveal a lot about how Australian policymakers view energy and climate policy. Santos is one of the largest and oldest Australian producers of oil and gas, second only to Woodside Energy (its name is an acronym of South Australia and Northern Territory Oil Search). The core of its operation is the Moomba gas field in the Cooper Basin, in the north-east corner of South Australia. The company now supplies gas to the entire eastern seaboard and has assets in the Timor Sea and Papua New Guinea. The consortium proposing to buy Santos, called XRG, is owned by the Carlyle Group and the state-owned Abu Dhabi National Oil Company (Adnoc). Carlyle, named for the New York hotel where its founders met to set up the business, is one of the world's largest private equity companies, with close ties to what US President Eisenhower described as the 'military-industrial complex'. Its early years are described in Dan Briody's book The Iron Triangle. Abu Dhabi is the wealthiest and most important of the United Arab Emirates. The value of its state-owned enterprises and sovereign wealth funds total over a trillion dollars. Abu Dhabi's wealth is derived almost entirely from oil and gas, so it is unsurprising to see its national oil company pursuing expansion through acquisitions like the proposed buyout of Santos. Unsurprisingly the prospect of handing ownership of a large share of Australia's energy resources to buyers like these has raised concerns. Most commonly, these are expressed in terms of energy security or, more nebulously, national interest. The issue of energy security can be dismissed pretty rapidly. Unlike the oil we import, the gas is physically located here. If we need it, we can keep it, regardless of the legalities of ownership, contracts and so on. At one time, perhaps, such an attitude might have raised concerns about sovereign risk, threats to future investment and so on. Foreign owners might have threatened us with action under Investor-State Dispute Settlement (ISDS) agreements. But the 'rules-based order' in which such concerns made sense, is largely a thing of the past, for good or ill. ISDS, in particular, is more or less dead. Even so, the government has shied away from fixing the absurdly unfavourable gas export contracts signed by Santos and others a decade ago. Concerns about how the deal might affect our national interest are harder to address, mainly because Australian governments have no clear idea of what our national interest might be. It might be argued that we ought to be maximising the returns from our natural resources, while winding down fossil fuels, in line with the goal of achieving 'net zero' emissions globally by 2050. But there is no sign that Australian energy policy is motivated by such goals. In fact, Santos has been a major player in the expansion of gas exports, notably of LNG from Queensland, and is pushing for even higher exports. The company has just received regulatory approval for the $5.8bn Barossa offshore gas project off the Northern Territory coast, described by critics as a 'carbon bomb'. The extra financial resources available to XRG might accelerate this. What is in our 'national interest' is similarly incoherent in regards to tax revenue. Australia taxes its massive gas exports weakly, and it's hard to see how we would get a worse deal from a foreign owned company compared to an Australian one. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Finally, neither Carlyle nor Adnoc can be expected to have any concern with the wellbeing of Australians. Carlyle, as a private company, is concerned with maximising its profits. Adnoc wants profits but also more influence over global markets. But it is a mistake to think that Santos cares any more, except about those Australians who happen to be shareholders, and who can expect a big payout if the takeover goes ahead. John Quiggin is a professor at the University of Queensland's school of economics
The National
5 days ago
- Business
- The National
Why Adnoc's offer to acquire Santos marks big leap for a state energy company
It would be the largest acquisition of an upstream international oil and gas company by a state-owned one. Adnoc's $18.7 billion bid for Australia's Santos, in partnership with private equity giant Carlyle and Abu Dhabi's holding company ADQ, is a dramatic sign of its ambitions. It tells us important things about Adnoc's strategy and its role in reshaping the global oil and gas industry. Adnoc made the offer through its international investment unit XRG, which, in its short life, has already made some big moves. XRG intends to become an $80 billion business focused on gas, chemicals and lower-carbon sectors. And it also aims to become a top-five integrated global gas business, with 20 million to 25 million tonnes of annual liquefied natural gas (LNG) capacity by 2035. The company has already acquired LNG assets and gas purchase contracts in the US and Mozambique, totalling about 4.4 million tonnes, alongside gas projects in Azerbaijan, Turkmenistan and Egypt. XRG is not afraid of aiming for full control of companies listed on western public markets, an area where Gulf state investors have often been shy. It endured a long negotiation and regulatory process to win control of Germany's speciality chemicals maker Covestro in a $16.3 billion deal which is now proceeding through European Union checks. In March, XRG reached a complicated agreement with Austria's OMV to merge cross-holdings in the Borouge and Borealis polymers businesses with Mubadala's Nova Chemicals. It is hard to think of a similar international expansion by a major oil-exporting country. Previous deals by Kuwait, Saudi Arabia, Qatar and Venezuela from 1981 onwards were much smaller, involved minority stakes for financial return, or focused on securing downstream outlets for crude oil production in refineries and petrol stations. The big Middle Eastern producers have generally taken the view that it made little sense to invest overseas in competition to themselves, when returns were so much better at home. XRG's approach, however, is different. Working with partners reduces its financial exposure while retaining its access to Santos's strategic benefits. Buying Santos does not compete with Adnoc's core oil business. Adnoc's LNG business depends on the historic Das Island plant and the under-construction Ruwais facility in western Abu Dhabi. But with plenty of other demands on its gas output in the UAE, achieving truly competitive scale and geographic spread requires international expansion. The Adelaide-headquartered company produces almost entirely gas, from fields in Australia and Papua New Guinea, including stakes in three important LNG projects. It has 7.5 million tonnes of annual LNG capacity, taking XRG almost halfway to its 2035 goal. The Papua LNG project, with an anticipated start date of 2028, will bring a further 1.3 million tonnes net to Santos's interest. The addition of Santos and the completion of Ruwais would make Adnoc the world's fourth-largest LNG producing company, slightly ahead of ExxonMobil and behind Shell. New projects, though, would see others such as fellow Australian Woodside regaining ground in the race. Beyond this deal, XRG's easiest route to its 20 million-25 million tonne target would be to acquire more US projects. There are plenty of them, many need finance and transactions are frequent. This contrasts to the rest of the world, where good LNG assets rarely come on the market, and the available greenfield developments bring major technical, commercial and political risks. Other than Australian compatriot Woodside, which is much bigger and would be a political hot potato, there are few publicly traded LNG specialists. There has been market chatter around various suitors for the UK's troubled BP, which itself has 8.9 million tonnes of annual LNG capacity plus a big and profitable trading portfolio. But Shell would likely compete hard with any bidder for its smaller British rival. Perhaps even more important than the raw volumes are three other things that Santos brings. First is expertise in developing international LNG projects. That will be useful whether XRG seeks organic opportunities or acquisitions to meet the rest of its 2035 target. Second is geographic balance. Its focus on Asia-Pacific balances the US-facing elements of XRG's LNG portfolio. The two major LNG-producing and consuming regions, the Atlantic and Pacific basins, are rather separate, even more so with the current difficulties in transiting through the southern Red Sea. US, and West and North African LNG primarily serves Europe, while East African, Middle Eastern and Australasian LNG goes to Japan, South Korea, China and south Asia. Because of tariffs, it is commercially impossible to sell American LNG to China at the moment. Third is pricing balance. US LNG is usually priced against the Henry Hub benchmark in Louisiana, sales in Europe are determined by gas trading hubs in the UK and the Netherlands, while LNG sold in Asia is mostly pegged to the oil price or the Japan-Korea marker. These prices can move a long way out of alignment with each other, particularly at times of crisis such as Russia's invasion of Ukraine in 2022. This is a chance for smart traders to profit but also involves risks of big losses if a company cannot cover its sales commitments. Santos's board has agreed to back XRG's offer, and L1 Capital, one of its leading shareholders, is also supportive. L1 estimated in 2023 that Santos's assets should be worth A$10.50 (US$6.80) per share, compared to the current offer of A$8.89. Still, XRG and its partners will have to overcome some hurdles. Santos's shares are trading 13 per cent below the offer price, indicating the market sees a significant chance the deal will not be completed, and that there won't be a higher counter offer. Last February, Santos and Woodside called off merger talks after failing to agree on valuation. Australia may be concerned about the security of domestic gas supply, for which Santos is a key producer. The state of South Australia will want solid commitments on preserving jobs. While Adnoc will give assurances on these points, the domestic politics around energy acquisitions by foreign companies are often tricky. Obtaining all approvals could take up to a year. Adnoc's willingness to brave this process is perhaps another competitive advantage over more cautious Gulf peers. The oil and industry has consolidated significantly, with the disappearance of major firms such as LNG leader BG, bought by Shell in 2015. European investors are shy of hydrocarbons, North Americans prefer their home markets, and Chinese and Russian buyers are not welcome in the West. This is a great time for someone with deep pockets and tolerance for risk to build a world-scale gas business.
