The relationship provides for the three companies to give each other preference to participate in future investments they make in natural gas and LNG in Australia and Papua New Guinea.
The deal was formalized in a letter from Santos Chairman Peter Coates to ENN founder Wang Yusuo and Hony Chief Executive John Zhao. It will involve ENN senior executive Eugene Shi coming on to the Santos board.
Together, ENN and Hony hold 15.1% of Santos. The alliance will continue as long as that shareholding remains at 15% or above.
Hony’s association with Santos began in late 2015 when the private company appeared as a friendly party after the Santos board rejected a takeover attempt from Scepter Partners, a privately owned entity with links in Brunei.
ENN acquired its stake in Santos from Hony in March 2016. It has been seeking a board seat since late last year.
Last month Hony and ENN put pressure on Santos when they staged a “mini raid” that brought their combined shareholding up to the present 15.1%. The register sits at ENN with 10.31% of Santos and Hony 4.8%.
ENN sees the alliance as an effective link of Santos’ upstream expertise with China’s burgeoning downstream market for natural gas that will enable Santos to move to its full potential as a significant gas and LNG producer.
Santos maintains the relationship will see ENN and Hony supporting future investment Santos might consider and Santos, where appropriate for shareholders as a whole, will include ENN and Hony in investment opportunities that arise.
Likewise ENN and Hony will keep Santos abreast of any investment opportunities they are considering so that Santos can decide whether to join in.