Harbour has shown it sincerely wants Santos and its assets. Picture: warepics.com.au
Harbour has shown it sincerely wants Santos and its assets. Picture: warepics.com.au

Questions raised over energy giant's bid for Santos

A RESPECTED gas analyst has questioned if the potential takeover of the owner of GLNG, Santos, would result in increased spending on the Curtis Island facility and the company's other assets.

Private equity backed global company, Harbour Energy is progressing with due diligence in its bid to take over Santos.

Its attraction to acquire the gas giant stemmed from the international transition to a lower carbon future, with the potential to increase LNG sales globally.

Harbour Energy said it expected to invest further into Santos' LNG-focused assets in Australia, but Energy Quest CEO, Graeme Bethune said splashing cash at the projects could be challenging.

If successful, Harbour will have control of GLNG as well as an 11.5 per cent stake in the Darwin LNG and a 13.5 per cent holding in PNG LNG.

The deal is subject to the approval of the Foreign Investment Review Board, which will consider repercussions for the east coast gas market.

"While Harbour says it expects to invest further in Santos's existing assets, the bid is highly geared, much more so than Santos is currently," Mr Bethune said.

"FIRB will need to be assured that Santos will have the capacity to meet Cooper Basin and GLNG capital needs.

"Having undertaken extensive negotiation with LNG producers to divert gas to the domestic market, the federal government would also need to be assured that Harbour is willing to commit to the domestic market as well as LNG."

He said in Energy Quest's March LNG report the 15 per cent stake held by Chinese investors ENN and Hony Group could be another challenge.

The report forecast LNG export revenue to reach a record $3.1 billion due to higher oil prices. West Australia generated $2 billion of the revenue, and the three Curtis Island plants accounted for $0.95 billion.

It said there were 24 cargoes of LNG shipped from Curtis Island in March, compared to 25 in February. APLNG shipped three fewer cargoes in March compared to February due a planned shut down.