In its pitch to the Oil Search board, Santos said combining their portfolios of long-life assets would create an “unrivalled regional champion of size and scale” with a stronger balance sheet and less risk as the industry encounters pressure over its contribution to global warming.
Oil Search, which turned down the bid earlier this month, is facing pressure from some investors to re-engage with Santos over an offer.
LNG is one of the nation’s largest export commodities, accounting for $32 billion in export revenue in the past financial year. The federal government expects this to increase sharply in the coming 12 months to $49 billion.
However, oil and gas companies are also facing escalating pressure on climate change and the prospect of demand for their commodities slipping faster and steeper in the future than previously expected. While natural gas is helping to reduce emissions in parts of the world by displacing coal-fired power, the International Energy Agency released a landmark report in May that warned investors must avoid funding any new oil and gas fields for the world to achieve the Paris accord’s aspirational goal of limiting global temperature rises to 1.5 degrees.