An Abu Dhabi-led consortium has withdrawn its $30bn takeover bid for Australian oil giant Santos, sparing the federal government from making a high-stakes decision on whether to back the deal.
XRG, the investment arm of the Abu Dhabi National Oil Company, said in a statement late on Wednesday that “a combination of factors” had affected its assessment, without elaborating.
XRG had lodged a non-binding bid in mid-June before requesting a series of extensions to finalise its proposal, raising questions over whether it would proceed. It was required to submit a binding proposal by Friday.
The proposal would have put a portfolio of oil and gas assets, including large operations in Western Australia and the Cooper basin, as well as critical energy infrastructure in the eastern states, under foreign control.
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Santos also controls a lucrative stake in a Papua New Guinea liquified natural gas project.
The deal was supported by the board of the Adelaide-based Santos, but heavily criticised by Australian unions. The proposal required various regulatory approvals and would have been tested by the Foreign Investment Review Board, which provides advice to the treasurer.
In contested deals, bidders would typically receive informal advice from government representatives on their view of the proposal before official processes.
Analysts told Guardian Australia that the lack of a major Australian partner in the consortium, such as a superannuation fund, was an obvious drawback to the proposal.
In a statement, XRG said it had been prepared to undertake new long-term commitments to Australian energy production “that would deliver meaningful benefits to domestic gas consumers and enhance regional energy security”.
“While the consortium maintains a positive view of the Santos business, a combination of factors, when considered collectively, have impacted the consortium’s assessment of its indicative offer,” XRG said.
The withdrawal saves the treasurer, Jim Chalmers, from making a tricky diplomatic decision. While a foreign takeover of the assets raised questions over domestic energy security, Australia has a robust trading relationship with the United Arab Emirates, which includes a bilateral free trade agreement.
Santos said in a statement it had been notified by XRG of the withdrawal late on Wednesday.
“The XRG consortium would not agree to acceptable terms which protected the value of the potential transaction for Santos shareholders, having regard to the likely extended timeframe to completion and the regulatory risk associated with the transaction,” Santos said.