According to insiders, Saudi Aramco and Abu Dhabi National Oil Company (Adnoc), the two Middle Eastern energy giants, are seeking to enhance their overseas natural gas investments by studying potential bidding for Australian natural gas producer Santos (SSLZY.US).

According to insiders, Saudi Aramco and Adnoc have been conducting preliminary evaluations of Santos as a potential acquisition target. Santos' stock rose about 1% in Sydney trading this year, with a market capitalization of AUD 24.9 billion (USD 16.7 billion).

Santos has liquefied natural gas projects in Australia, Papua New Guinea and East Timor, which are highly favored due to the rapidly growing demand in Asia. The company also operates natural gas business in the domestic market of Australia and has conventional oil assets in Alaska.

Santos declined to comment, Adnoc representatives declined to comment, and Saudi Aramco spokesperson did not immediately respond to comments.

Natural gas is viewed as a critical bridge fuel for energy transition, and Gulf countries are investing billions of dollars in this area. Qatar plans to nearly double its liquefied natural gas export capacity, while Saudi Arabia and the UAE inject funds into domestic gas fields and establish global trading businesses.

In June, Saudi Aramco reached a preliminary agreement to purchase a stake in the Sempra company's Texas liquefied natural gas export facility, including transporting fuel from the project. In the same month, the Saudi company reached an agreement to buy liquefied natural gas from the United States for the first time, signing a non-binding contract for a 20-year period to receive 1.2 million tons of liquefied natural gas annually in the project planned by Next Decade in Texas.

Adnoc has been carrying out a series of acquisitions and is one of the most active traders in the energy sector. Last month, Adnoc entered into detailed negotiations for a possible acquisition of Covestro, a German chemical producer, for €11.7 billion (approximately USD 12.6 billion). In May of this year, Adnoc acquired stakes in natural gas projects in the United States and Mozambique and ambitiously expanded its chemical and trading businesses globally.

The above-mentioned insiders said that Santos, headquartered in Adelaide, may also attract the interest of other potential buyers, and discussions are still ongoing, with the acquirer yet to decide whether to continue submitting a tender offer.

In recent years, Santos has received multiple tender offers. In 2018, Santos rejected several tender offers from US Harbor Energy, LLC.

Woodside Energy Group Limited (Woodside Energy Group) held preliminary negotiations last year for the acquisition of Santos, which could create a liquefied natural gas giant. Earlier this year, the negotiations between the two sides broke down, and Santos stated in February that it will seek other ways to release shareholder value.