Another piece of critical infrastructure in foreign hands? Not without conditions

Gas still plays a role in powering Australia, even as the country transitions towards a fully renewable energy system. The link between gas supplies, national resilience and economic prosperity means that any decision affecting its supply has a national security dimension. That’s why a current takeover bid for Santos, one of Australia’s most significant gas producers, must be assessed through a national-interest lens.

Santos said on 16 June a consortium led by state-owned Abu Dhabi National Oil Company had proposed to buy it for $18.7 billion.

We’ve been here before. In 2015, the lease of Darwin port to a foreign-owned entity proceeded without enough scrutiny of strategic consequences. We cannot afford to repeat that mistake. This time, the implications are broader. Santos is not just a business; it is part of Australia’s energy backbone, with critical infrastructure assets across Western Australia, South Australia and Queensland.

Santos operates three major gas plants in Western Australia, supplying nearly the entire domestic market, including our mining and industrial sectors. Its onshore facilities in Queensland provide gas to the national market. Its footprint is extensive, and its role in ensuring gas supply security—especially during peak demand periods—cannot be overstated.

Yet the east coast gas market is already under pressure. Gas that was once available for domestic use is increasingly diverted to meet export commitments. This arrangement has exposed domestic users to soaring prices despite being just kilometres from gas fields. Local manufacturers are increasingly unable to secure long-term, affordable gas contracts, threatening investment, jobs and sovereign industrial capability.

Against this backdrop, a foreign acquisition of Santos by a state-linked entity, such as Abu Dhabi National Oil Company, demands rigorous scrutiny.

Under the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020, any proposed foreign investment in ‘national security businesses’ must be reviewed by the Foreign Investment Review Board. A gas supplier such as Santos clearly falls within that category by virtue of owning and operating liquefied natural gas plants, major pipelines, storage facilities and technologies governed under the Security of Critical Infrastructure Act 2018.

Foreign ownership of such a company as Santos carries several serious concerns.

First, there is an ownership and control risk, particularly when the investor is linked to a foreign government. This raises questions about whose interests ultimately shape strategic decisions.

Second, Santos operates critical energy infrastructure, including gas production and processing facilities that are essential to Australia’s domestic energy security and export economy. These operations rely heavily on interconnected data and operational technology systems. Any compromise of these systems, whether through cyberattack, espionage or unauthorised access, could disrupt energy supply chains, undermine economic stability and expose vulnerabilities that foreign adversaries could exploit.

Third, foreign control introduces supply chain vulnerability. Offshore decision-making could influence domestic gas flows or prices in ways that do not align with Australia’s interests.

Fourth, geostrategic exposure must be considered, especially when a takeover deepens Australia’s reliance on a state-linked investor with uncertain alignment in a contested geopolitical environment.

To mitigate these risks, the Foreign Investment Review Board must condition any approval on robust national-interest protections. These should include guaranteed domestic supply quotas to ensure reliable and affordable access to gas. And Australian board representation and veto rights should be secured for decisions involving critical infrastructure. Any deal must also include full transparency on supply flows, with real-time reporting of gas production, exports and domestic allocation. Finally, divestment clauses should be embedded in the agreement, giving the Australian government the right to reclaim or restructure ownership of strategic assets if national security is ever compromised.

Australia’s energy security can no longer be treated as a secondary consideration in foreign investment decisions. The Santos takeover is a test case for whether our systems—and our political leaders—have learned the lessons of the past. This time, the national interest must come first.