Speculation persists on China Petro's interest in Santos

09 December 2008

Despite the denial by  Australia's third-biggest oil and gas producer, Santos (See: Santos denies takeover move by CNPC), speculation continues to mount that China's largest oil and gas producer, state owned, China National Petroleum Corp is looking to acquire the Australian company for for $8 billion plus. Santos denies takeover move by CNPC 

With a 15 per cent shareholder cap imposed on the company being lifted late last month, share prices of Santos surged by 9 per cent yesterday, when media reported of the takeover interest shown by the Chinese oil and gas producer and also reported that two international firms had visited Santos's head office in recent past.

In order to make a bid, CNPC is looking for partners such as Chevron of the US, Britain's BP, Italy's Eni and France's Total to form a consortium as a solo bid by CNPC may not pass the eagle eye of Australia's competition and foreign investment authorities.

Analysts say that any bid for Santos has to be over $8 billion, as its current stock value is approx $7.8 billion, which has fallen by over $4 billion since last June when it was worth $12 billion.

Santos said last night that it was aware of media reports, but issued a statement saying "so far as Santos is aware, this is pure speculation" but it could not explain to the Australian Securities Exchange, the reason for a surge in its stock prices.

Analysts comment that since Santos controls one of the biggest and most strategic resources in Australia by providing 60 per cent of Australia's coal-seam gas, it is highly doubtful that the Australian regulators will pass the deal that easily as the Australian authorities had in the past blocked Anglo-Dutch group, Shell's bid for Woodside Petroleum, citing national interest.