Australian energy company Santos welcomes proposed acquisition of a minority stake by a Chinese natural gas distributor. Photo courtesy of Santos.
ADELAIDE, Australia, March 24 (UPI) -- Australian energy company Santos said it welcomed a proposed Chinese acquisition of a share in its business, noting the strong regional interest in gas.
Chinese gas distributor ENN Group announced a proposal to take in 11.7 percent in the shares in Santos held by Hony Capital. ENN is the largest gas distributor in China.
"Santos welcomes the ENN Group onto the register as a shareholder with obvious knowledge of the gas business across the region," the Australian company said in a statement.
The acquisition of the shares in Santos is valued at $750 million. Through a private arrangement, Hony said it would buy a $380 million stake in the Chinese company.
The Australian energy company started producing its first batch of liquefied natural gas from a facility on Curtis Island, Queensland, in September.
Santos leads the $18.5 billion project designed to convert coal seam natural gas to LNG for exports to the global market. The Curtis Island LNG project is fed by a 260-mile underground pipeline from the Bowen and Surat basins in Queensland.
Struggling through a weakened energy market, the company last year said it was taking the "appropriate steps" to cut costs, saying it planned to explore interests expressed in its various assets across Australia.
Chevron signed a non-binding 10-year agreement with ENN for the delivery of about 500,000 metric tons of LNG sourced from the Gorgon project in Australia in January.
The deal is the second for Chevron in the Chinese market since December, when it signed with China Huadian Green Energy for the delivery of up to 1 million metric tons of LNG per year over 10 years, starting in 2020.