Woodside-Santos is a sign of the times
Talk of a possible $80 billion Woodside-Santos merger follows a wave of consolidation in global oil and gas as companies band together for survival.
In a net zero world, oil and gas companies will need access to a lot of resources to stay afloat — both capital and political.
As it becomes increasingly difficult to secure environmental approvals for new exploration projects, and falling oil prices make some too expensive to pursue, oil and gas majors are banding together for survival.
In recent months, a wave of consolidation has hit the sector, which is apparently undeterred by predictions that oil demand will peak as early as 2030. In October, Chevron merged with Hess, while ExxonMobil joined forces with Pioneer, creating strong edifices capable of managing the increasing difficulty of getting projects approved and shareholder pressure to decarbonise.
The logic of a possible $80 billion tie-up between Woodside and Santos to create a single large Australian oil major echoes this theme, which the Australian Centre for Corporate Responsibility neatly surmised as a “defensive strategy for an industry facing structural decline”.
