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Santos inks partnership with Chinese investors

Written by  Monday, 26 June 2017 22:54
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Australian energy giant Santos announced the launch of a new strategic partnership with existing Chinese investors ENN Group and Hony Capital.

ENN, a gas distributor, and Hony, a private equity firm, are associated shareholders of Santos with an aggregate interest of 15.1% of Santos shares.

Based on mutual cooperation and assistance, the new arrangement will see the joint investment in gas exploration and liquefied natural gas (LNG) production in Australia and Papua New Guinea (PNG)

The parties agreed that the new partnership will become effective and remain in effect for so long as ENN and Hony have a relevant interest in 15% or more of Santos shares.

Santos chairman Peter Coates said Hony became a major shareholder in 2015 and together with ENN has continued to support Santos through challenging times.

“We look forward to a closer relationship with Hony and ENN and their support for the continued growth of Santos for the benefit of all shareholders," he said. 

Wang Yusuo, founder, and chairman of ENN said ENN and Hony strongly support the new growth strategy of Santos under the leadership of CEO Kevin Gallagher and the Santos board.

“The strategic relationship will effectively link up the upstream E&P competence of Santos with China's fast growing downstream market of natural gas, and explore many opportunities for Santos to realize its full potential as a leading producer of gas and LNG,” he added 

As part of the move, Eugene Shi will join the board as a non-executive director. Shi is vice president of ENN Ecological Holdings, a subsidiary of ENN, and has more than 20 years of experience across capital markets, mergers and acquisitions, and business development. 

Santos is focused on five core, long-life natural gas assets: Cooper basin; Gladstone LNG (GLNG); PNG; Northern Australia, and Western Australia. The firm expects 2017 sales volumes to be in the range of 73-80 MMboe and production to be between 55-60 MMboe.

In 2016, the GLNG operator recorded a 31% increase in annual sales volume of 84.1 MMboe, and 7% higher annual production of 61.6 MMboe. Due to the ramp-up of GLNG and strong performance at PNG LNG and Darwin LNG, 2016 LNG sales increased by 89% to 2.8 million ton and LNG revenue hit $887 million.

Image: Santos GLNG workers / Santos

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