Quite rightly:
US player Harbour Energy’s ambitions for an $11 billion takeover of Santos have run immediately into political hot water, as South Australian Treasurer Tom Koutsantonis signalled the state would seek to prevent the oil and gas producer falling into foreign hands.
“The state government would be very concerned by any foreign takeover of Santos,” Mr Koutsantonis said after Santos confirmed a report in The Australian Financial Review that it had already rejected an initial $9.5 billion approach from privately owned Harbour.
“We are monitoring this situation very closely, and if we need to protect the interests of South Australians we will,” he said.
Given STO played a key role in not supplying gas to the state last summer, shutting down swathes of its power grid.
Absolutely no way should this transaction be allowed to go ahead. STO is the key player in the Curtis Island gas cartel. Handing to it another blood-sucking international oil giant to gouge the economy further would be completely bonkers. STO is yet to be brought to heal even as stands. Matt Canavan is full of it:
Federal Resources Minister Matthew Canavan has insisted that last month’s deal with east coast gas producers is doing its job in making more gas available and bringing down prices despite warnings from Incitec Pivot that a lack of affordable gas may force the closure of its Queensland fertiliser plant next year.
Mr Canavan pointed to the recent agreement by the Australia Pacific LNG project to supply Origin Energy with 41 petajoules of gas for the east coast market and noted that will cover about two-thirds of the projected shortfall in domestic supply for 2018.
He also noted spot prices for gas on the east coast had fallen to $6-$7 a gigajoule, down from $10-$12/GJ earlier this year.
But industrial buyers are still saying they are finding difficulty accessing more gas, with some complaining that higher-priced markets such as power generation were snapping up the increased supplies, leaving them short. Some say the government should have kept the option of triggering export controls on Queensland LNG for 2018, a threat it put on hold as a result of the deal with east coast producers.
Those are spot prices not contracts. This is not about supply of gas, it’s about the price of the supply of gas and there is no evidence yet that contract prices – which comprise 95% of volumes – have fallen to export net back, let alone to where they should be. As Labor comes into power, it must strengthen domestic reservation materially. Having an ever more complicated set of international owners will not aid such an endeavour.
That said, the STO takeover could be an opportunity to force change on the sector. The ACCC could insist that the new owners divest assets as a condition of purchase. The government could acquire Cooper Basin assets and form a national oil company to supply local markets, as well as Narrabri. That would benchmark prices for the entire cartel.
But, given, that’s got about much chance of happening as I have of being invited to the STO AGM, we’ll have to stick with blocking the deal.
