The recent exposure of a 20-year methane leak at Santos’ Darwin LNG hub has sunk the multibillion-dollar takeover of the oil and gas giant by the Abu Dhabi National Oil Company (ADNOC).
The sale, which would have been the biggest all-cash takeover in Australian corporate history, would have seen Santos absorbed into the United Arab Emirates’ state-owned XRG.
ADNOC walked away from negotiations two days before the deal was to be finalised, resulting in the third collapsed takeover bid for Santos.
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“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,” ADNOC said in a statement.
One of these factors was reportedly a design flaw at Santos’ Darwin LNG facility, which has resulted in huge amounts of methane leaking from the storage tank for nearly 20 years—estimated at up to 184kg of methane per hour.
Methane is a greenhouse gas that poses a significant environmental risk as well as being highly flammable.
The methane leak was kept from the public until documents were uncovered by the Environment Centre NT. Further investigations by the ABC revealed Santos used the leak to negotiate a discount when it acquired the assets from ConocoPhillips. Despite being aware of the problem, regulators did not force either ConocoPhillips or Santos to repair the tank.
Environment Centre NT executive director Kirsty Howey said, “There’s been a cover-up, there’s been a decision made in the interests of a multibillion company rather than the community,” she said.
“This is a national scandal and an unfolding disaster. Santos has been caught red-handed putting the environment, climate and the health and safety of the people of Darwin at risk, while regulators have been asleep at the wheel.
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“Santos must fix the leak, and the Albanese Government must fix the problem. The faulty tank threatens Australia’s climate and the health and safety of the people of Darwin.”
Santos responded to news of the deal collapse with a statement claiming ADNOC had not found anything in its due diligence that would lead it to withdraw.
Santos chair Keith Spence said, “Santos has a clear strategy, strong leadership and high-quality growth opportunities across our global portfolio. The Board is confident these strengths will deliver long-term value for shareholders.”
