Fans of 1970s music (I am guessing that this includes many of my fellow Baird Maritime columnists and several of the most distinguished offshore shipbrokers) will recall the classic More More More by Andrea True Connection.
Indeed, the video features one of the most unforgettable lemon yellow garments worn in pop. The song was remade in 1993 by girl band Bananarama here. The lyrics seem especially appropriate to this week in offshore:
“Just get the cameras rolling
Get the action going…
More, more, more
How do you like it, how do you like it
More, more, more”
This week sees a return for a catch-up on some key stories that we covered in the past, with more, more, more news.
In fact, we have so much more, more, more, that this piece is a two-parter. Let’s get the action going with an update on another corruption arrest in Baku.
First more, more, more shocking corruption. Reuters reported last week that yet another former senior executive of Azerbaijan’s state energy company SOCAR has been placed in pre-trial detention after being arrested on suspicion of undermining state economic security and large-scale misappropriation, a court said.
This comes after Ramin Isayev, the ex-CEO of SOCAR’s drilling joint venture, was sentenced to 14 years for embezzling US$32 million earlier this month, as we reported.
The latest detainee, Adnan Ahmadzada, had worked in various leadership positions at SOCAR after joining the group in 2006, including as the Executive Director of SOCAR Trading from 2018 and as Vice-President of the company's investments and marketing since 2019. As per his Wikipedia page, he had been awarded a medal for his services to the development of the country’s oil industry in 2015, and was prominent in the karate scene in Baku.
Just as in similar anti-corruption drives in Russia, however, this arrest should not be seen as a sign that the country’s president of more than twenty years, Ilham Aliyev, has a zero-tolerance approach to bribery and embezzlement, merely that Mr Ahmadzada had gone too far or had fallen out of favour.
Azerbaijan continues to transition to a full- scale authoritarian dictatorship now. President Aliyev has been conducting its most comprehensive crackdown against civil society in its post-independence history. The majority of the country’s human rights defenders, journalists, and lawyers are now in exile or in prison.
Interviews with activists show that even academics, economists, peace activists and those living and operating outside of Azerbaijan have faced fabricated criminal charges resulting in long sentences of imprisonment.
All the while, those close to the Presidential Family continue to accrue massive wealth, including hundreds of millions of dollars of property in London and Dubai (surprise!), as per the Organised Crime and Corruption Reporting Project’s investigation in 2024.
Azerbaijan produced over 580,000 barrels of oil per day last year, most of it from BP-operated fields in the Caspian Sea. Quite where the billions the Azerbaijani Government collects in taxes and profit share from the fields go is not exactly clear.
Thanks to Russell Searanke in Upstream for highlighting that the bid by ADNOC and its private equity partners was actually the fourth failed take-over attempt for Australian gas giant Santos in the last decade. Russell highlights how, “Woodside tried and failed [to buy Santos] in 2023, while Harbour Energy tried in 2018 and Scepter Partners in 2015.”
Santos is a serial under-achiever. Russell went on to outline the company’s coal seam gas Gladstone LNG project is, “considered to be a lumbering asset that should be simplified by bringing it down to one single LNG train” given a shortage of gas supply to the facility.
Searanke’s colleague Amanda Battersby previously covered the US$500 million/20 per cent cost overrun Santos has experienced in its Pikka project onshore Alaska. David Llewellyn-Smith at Macrobusiness also provides context to the Gladstone LNG problems and what he describes as the, “East Coast Gas Cartel.”
I commented last week that Australia, “is now home to two seemingly unsellable and subscale national champions in oil and gas, Woodside and Santos… Neither Santos nor Woodside, which acquired BHP Petroleum in 2022, has an attractive growth portfolio and both remain heavily dependent on their Australian home market for production.”
I stand by those words. We covered the collapse in Santos’ share price after the ADNOC bid was withdrawn, and commented how the company’s shareholders have seen flat returns since 2021 whilst those in just about every other oil company in the world have surged. If you look at the post-Covid performance of Santos, the level of underperformance is monumental.
But Santos does manage to outperform one other company: Woodside Energy, the dog of dogs in the global oil and gas business. The theme song for listed Australian energy majors should surely be Who Let the Dogs Out?
Woodside, like Santos, surely deserves to be taken over by a competent international player and run properly. But this is Australia, so that won’t happen.
What’s amazing to me is that BP is widely perceived to be the weakest of the oil majors and is subject to endless takeover speculation and concern at its underperformance, but its shares are up 99 per cent over five years.
The Aussie players languish, the shares go nowhere and the business sucks, but none of the shareholders, who represent a significant chunk of Australian retirement funds, say anything to rock the boat, or to attempt to fire the completely inept management and boards of these two companies.
When you look at the board and management of Santos, you perhaps see one reason why the company underperforms. There is a chronic lack of international experience, and an incestuous relationship with both the other Aussie energy giant and the industry regulators.
Nobody gets fired in Woodside, it seems; they just get hired at Santos. A quick dip on company insiders on Marketscreener.com or the Santos website show the problem (click on the photos to get the biographies on the company page).
The CEO of Santos, Kevin Gallagher, is also on the board of five other Australian companies, which might be seen as a stretch for any CEO, let alone one whose business has chronically underdelivered.
The Chairman of Santos, Keith Spence, was previously the Chief Operating Officer and Acting Chief Executive Officer at Woodside until his retirement in 2008, as well as formerly being the Non-Executive Chairman for Clough where the CEO of Santos also worked at the same time. Mr Spence was also a past Chairman of the National Offshore Petroleum Safety Authority.
The CFO of Santos, Sherry Duhe, was previously the CFO and Executive Vice President of Woodside up until November 2021.
Michael Abbott has been General Counsel and Executive Vice President at Santos from 2023. Mr Abbott also formerly worked at the Australian Petroleum Production and Exploration Association, and (surprise!) as Vice Chairman and Senior Vice President-Corporate and Legal at Woodside from 2014 to 2020.
It just goes on and on and on. Santos’ Non-Executive Director Dr Vanessa Guthrie was at Woodside as Vice President-Sustainable Development from 2006 to 2010, whilst her Non-Executive Director peer Michael J. Utsler was previously employed Chief Operating Officer....at Woodside.
One of the few directors of Santos who didn’t work at Woodside is Vickki McFadden, who has a lot of relevant experience for the role. Ms McFadden has served as the President of the Australian Takeovers Panel, as Chairman of Australian offshore labour provider Skilled Group, and as a Non-Executive Director of scandal-ridden Leighton Holdings from 2013 (now part of CIMIC).
Her tenure there included the Leighton board’s cleaning up in the aftermath of the unfortunate period when the company’s agent in Monaco was found to have been bribing Iraqi officials to win contracts for the company near Basra (see here and here and here).
In January 2017, Wal King, the former CEO of Leighton Holdings, received an apology and an out-of-court settlement from Fairfax Media in Australia following their claim that he knew of alleged corporate misconduct, including the payment of a AU$42 million (US$28 million) bribe in Iraq.
Meanwhile at Woodside, the board is a lot more international and has a much wider oilfield experience, with directors who have previously worked at TotalEnergies, ConocoPhillips, Schlumberger and Shell. However, this still hasn’t prevented the company from being the amongst worst performers of all the major oil and gas producers anywhere in the world since 2020.
Again, many on the Woodside board are very much tied into the Australian establishment, and seem to have been in their roles for an excessively long period of time. Woodside’s Chairman Richard Goyder has been in the job since 2018 and was also a non-executive director of that other great Aussie monopoly, protected national champion success story national airline Qantas from 2018 to 2024.
Presumably, he was able to share his learnings from the airline of how to maximise management bonuses whilst laying off staff and preventing foreign competition.
Meanwhile, Woodside’s Non-Executive Director Ian Macfarlane was Australia’s longest serving Federal Resources and Energy Minister, and the Coalition government ’s longest-serving Federal Industry and Innovation Minister, when he served in the Australian cabinet between 2001 and 2016, at which point he conveniently joined the Woodside board.
Another ex-politician on the Woodside board is the former West Australian Treasurer and MP, Ben Wyatt, who is also a Director of mining giant Rio Tinto.
The problem for shareholders of Santos and Woodside is that the protection of the companies as Australian national champions means they are considered too important to be permitted to be bought by foreigners, so that there is no pressure on them to improve. There are no domestic companies big enough to buy them.
They have a strong position in their domestic market, and they know that their strong ties back into government will protect them.
Both have sought easy acquisitions by mopping up their domestic competitors, rather than the hard work of actually discovering and producing oil and gas themselves. Woodside bought BHP Petroleum and Santos acquired Oil Search, Quadrant Energy and ConocoPhillips Australia.
Woodside’s biggest new production overseas, the Sangomar oil field in Senegal, which came online last year, was actually discovered by Cairn Energy in 2014. Woodside subsequently bought 82 per cent of the block from Cairn and its original joint venture partners.
Woodside’s own international discoveries in Myanmar cannot be developed due to the brutal civil war there.
Woodside also faces large domestic decommissioning liabilities. The fiasco of its 2016 sale of the floating production unit Northern Endeavour, which was working on Laminaria–Corallina fields off northern Australia, shows how expensive these liabilities can be.
Woodside’s cosy relationship with the industry regulators and its sweetheart deal with a flimsy operator came at a heavy price for the taxpayers and, eventually, for all oil producers in Australia. Russell Yeo has a detailed summary of the history of this troubled asset here.
Finally, last week, the rusting hull of Northern Endeavour began its tow out of Australia, destined for Singapore and then a voyage on a COSCO Shipping heavy lift vessel to an environmentally friendly scrap recycling yard in Denmark, drawing a line under a shameful period of Australian offshore history.
Now the industry regulator has a tender to permanently plug and abandon all nine wells in the shut-in oilfield.
The sad story of the Laminaria–Corallina fields is a reminder that the cheap and easy solution is often not the right one (and proves neither cheap nor easy when implemented), and that Australia’s oil companies’ close ties to Canberra can actually backfire on all parties concerned.
Santos also faces these same challenges. The company is in the process of preparing to plug and abandon the Tern-2 wellhead located within the Tern Field in the Bonaparte Basin approximately 300 kilometres off Darwin, in water depths of approximately 83 metres. All wells in the Tern field have been permanently plugged and abandoned with the exception of Tern-2, which is currently classified as temporarily abandoned, according to the industry regulator Nopsema.
Without some serious changes of management, we can expect more, more, more underperformance from these two Aussie dogs.
In part two, we will look at Mozambique, Italy, Russia and Ukraine, as well as our weekly update on the ongoing auction of parts of the Bourbon fleet by Chinese lender ICBC.