Gas giant Santos enters new strategic partnership with Chinese investors

SYDNEY - One of Australia's largest natural gas producers, Santos, has launched a new strategic partnership with existing Chinese shareholders on Tuesday.

The two Chinese interests, ENN Group and Hony Capital hold a combined 15.1-percent stake in Santos, and the new arrangement will see "mutual cooperation and assistance" from both sides to spur the growth-based strategy in Australia and Papua New Guinea currently being adopted by the gas giant.

Chairman of Santos Peter Coates was pleased to announce the partnership and said he looks forward to the "formalization" of what was already a great relationship.

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

"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."

The founder and chairman of ENN Wang Yusuo was excited about the new development, and said he fully supports the strong growth plans of the Australian gas producer.

"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," Wang said.

The move should prove to be a positive one for the company, according to Ric Spooner, chief market analyst at CMC Markets, who told Xinhua on Tuesday that it will help the gas giant with their strategy moving forward.

"It is a positive for Santos. It does just confirm the potential for a partnership between Chinese investors and Santos in providing capital for future development, as capital has been an issue for Santos in the past," Spooner said.

The market expert said the move also provides more clarity for the market, with the transparent nature of the partnership able to allay any fears that investors may have had about the leadership direction of one of Australia's largest companies.

The new deal will see the door opened up for more opportunities into the burgeoning Chinese market for Santos, as well as the potential to engage in co-investment in expansion and acquisitions between the companies.