(Reuters) – Australian oil groups Woodside Energy and Santos announced on Thursday that they had started preliminary discussions regarding a potential merger worth nearly 80 billion Australian dollars (54.68 billion euros), amid pressure growing demand for decarbonization and as both companies face obstacles in their growth plans.
Woodside clarified that the discussions were confidential and incomplete and that there was no certainty as to the outcome of the transaction.
A merger between the two groups would be closely examined by the Australian competition watchdog, which has toughened its position with regard to takeover authorizations in concentrated sectors.
“The ACCC is aware of public reports about the potential transaction,” a spokesperson for the Australian Competition and Consumer Commission said. “If the potential transaction proceeds, the ACCC will consider whether there is a need for a public review of the impact of the merger on competition.
The discussions between Woodside and Santos come less than 18 months after Woodside merged with BHP Group’s oil and gas division, as the group works to secure final approvals for its Scarborough project in Western Australia. ‘worth 16.5 billion Australian dollars.
At their annual investor briefings, Woodside and Santos have both warned that near-term production prospects look challenging, while pointing to high capital spending and regulatory hurdles to their current projects.
Woodside shares have fallen 15.4% since the start of the year, while those of smaller rival Santos have lost 4.3%.
(Reporting by Rishav Chatterjee in Bangalore, Augustin Turpin, editing by Kate Entringer)
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