The XRG consortium, which includes Abu Dhabi’s state-run energy company and its private equity partner, is working to finalise a binding agreement for the proposed acquisition of Australian gas producer Santos. However, time is running short, and the outcome depends heavily on securing approval for foreign investment while tensions rise over local gas shortages and national interest.
Talks have intensified ahead of the 19 September deadline. Senior XRG representatives are expected to return to Australia for key meetings and discussions with stakeholders. The deal, first announced three months ago, has involved detailed due diligence on Santos’s gas operations in Australia, Papua New Guinea and Alaska. The biggest remaining hurdle is obtaining approval from the Foreign Investment Review Board. Australia's treasurer must consider its recommendation while weighing concerns in the east coast gas market, which is expected to face shortages from 2029.
Advisers involved in the deal are managing both political and economic challenges, given past rejections of foreign takeovers in the energy sector. Santos’s own advisers have been consulting on investment policy. Meanwhile, the Abu Dhabi firm leading the bid is also engaged in another major acquisition in Europe, which is facing scrutiny due to the possible impact of foreign subsidies on market competition.
To address concerns, XRG has committed to maintaining an affordable domestic gas supply while meeting its export obligations. There is speculation that it could offer Australian energy commitments similar to those it proposed during European negotiations. At the same time, the Narrabri gas project, which could supply half of New South Wales’s daily gas demand, remains controversial due to ongoing environmental and community objections.
The implications of the deal go beyond gas availability. The Australian government continues to review the broader gas sector, including the potential for compulsory domestic supply and resource allocation. Industry views remain split. Some voices oppose Santos’s ability to purchase domestic gas for use in liquefied natural gas exports. Approval of the takeover could significantly reshape the energy sector in Australia, but not without political, environmental and economic consequences.
