SANTOS has announced a strategic relationship with Chinese investors ENN Group (ENN) and Hony Capital (Hony).

ENN and Hony are already associated shareholders of Santos with an aggregate relevant interest of 15.1% of Santos shares.

The strategic relationship is based on mutual cooperation and assistance in order to support the growth of Santos. It is the intention of ENN and Hony that Santos will be the primary investment vehicle for material investment by them in upstream gas reserves and LNG production in Australia and PNG.

“Santos welcomes the formalisation of a strategic relationship with Hony and ENN,” Santos chairman Peter Coates said.

“Hony became a major shareholder in 2015 and together with ENN has continued to support Santos through challenging times. 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.”

Chairman Wang, founder of ENN, said ENN and Hony strongly support the new growth strategy of Santos under the leadership of CEO Kevin Gallagher and the Santos Board.

“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 realise its full potential as a leading producer of gas and LNG.”

As part of the strategic relationship, Eugene Shi will join the Santos Board as a non-executive director. Mr Shi is vice president ENN Ecological Holdings Ltd and has more than 20 years experience across capital markets, M&A, strategy and business development.

The agreement will terminate if ENN and Hony cease to have a relevant interest in at least 15% of Santos shares or may be terminated by Santos, ENN or Hony 12 months after ENN ceases to have any nominee Director on the board of Santos.