Woodside Energy, Santos in Merger Talks to Create Global Energy Giant

By David Winning

SYDNEY--Woodside Energy and Santos said they are discussing a merger that could result in a new global giant worth around $52 billion, illustrating how rising demand for natural gas in the wake of the Ukraine war is reshaping the energy sector.

Woodside and Santos said talks are at an early stage and there is no agreement over a deal that would rank as one of the largest in the energy sector this year. Santos said it was weighing the merger alongside other options to boost value for shareholders after its stock declined around 5% over the past 12 months.

A combination of Woodside, which has a market value of $37.3 billion, and Santos, worth some $14.6 billion, would bring together Australia's two largest energy companies at a time when the country vies with Qatar to be the world's top exporter of liquefied natural gas.

A combination with Santos would represent the second major transaction completed by Woodside in recent years after it acquired the petroleum business of BHP Group in 2022. Woodside operates LNG export terminals in Australia, and it acquired assets in the Gulf of Mexico and Caribbean through the BHP deal.

Prices of liquefied natural gas rose sharply in 2022 after Russia moved to curtail pipeline gas supplies to Europe. While a mild winter on the continent brought prices back down again, many countries have embarked on a multiyear effort to diversify their energy supply, including importing more LNG. That has made projects that produce LNG or that move it across the sea to import terminals more valuable.

In a report published in October, the International Energy Agency said the LNG market balance would likely remain precarious until new production becomes available from the middle of this decade, mainly from the U.S. and Qatar. New LNG projects could add 250 billion cubic meters per year of liquefaction capacity by 2030, equal to almost half of today's global LNG supply, the IEA said.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

December 07, 2023 04:06 ET (09:06 GMT)

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