(Bloomberg) – Abu Dhabi National Oil Co. has made an $18.7 billion offer for Australian fossil fuel producer Santos Ltd., in one of the most audacious overseas moves yet by the Middle Eastern company as it seeks to expand its production of liquefied natural gas.

ADNOC’s investment arm XRG PJSC joins peers including Saudi Aramco in targeting LNG, tapping the potential of one of the fastest-growing fossil fuel markets. It now stands on the brink of a deal that would hand it stakes in major operations in Australia and Papua New Guinea — if it can secure regulatory approvals.

Santos CEO Kevin Gallagher has rebuffed several approaches from peers over the last few years, and has come under fire from impatient investors. Now the board of Australia’s second-largest fossil fuel producer has recommended ADNOC’s cash offer of $5.76 (A$8.89) per share — a 28% premium to Friday’s close.

“Credit to Gallagher for extracting such a premium offer – he will have earned the payout of his ensuing incentives in doing so,” Saul Kavonic, an energy analyst at MST Marquee, said in a note. “Gallagher has found his escape parachute and it’s made of gold.”

Santos shares closed 11% higher on Monday at A$7.72 a piece. That’s the biggest daily jump since November 2020, but the stock remains shy of the ADNOC offer, in large part because of the hurdles that lie ahead, including clearance from the Australian authority that reviews foreign investments.

“It’s a great price,” Fereidun Fesharaki, founder and chairman of energy consulting group FGE told Bloomberg TV. “XRG is a global entity which wants to create a lot of LNG and upstream capability inside the company. My only question is whether Australia’s Foreign Investment Review Board will accept this or not, and I think it will be challenging for them to approve it. In the past they have been very reluctant to make these approvals.”

Fesharaki added that one option would be to keep the current management and Santos as an independent player. “If you can convince them that this will function as an Australian company with foreign ownership, they might go along with it,” he added.

A spokesman for the Treasury Department said in a statement that foreign investment matters are reviewed on a case-by-case basis to ensure they aren’t contrary to national interest or security.

Santos boss Gallagher has spearheaded an aggressive investment plan to increase output by about 50% by the end of the decade, which at times had frustrated investors who wanted higher returns instead. That strategy appears to have paid off, ultimately luring in a consortium searching for high growth potential.

The consortium led by ADNOC’s XRG also includes Abu Dhabi Development Holding Co. and Carlyle Group Inc. XRG has been on the hunt for gas and chemicals deals as it targets an $80 billion enterprise value.

“ADNOC’s XRG is paying a premium to enter the global LNG game,” said MST Marquee’s Kavonic.

“The proposed transaction is aligned with XRG’s strategy and ambition to build a leading integrated global gas and LNG business,” the ADNOC unit said in a statement. The company plans to “invest in Santos’ growth and further development of its gas and LNG focused business,” it said.

Santos has long been an attractive target for rivals. In 2018, the Adelaide-based company rejected multiple offers from US-based Harbour Energy Ltd., while talks with Woodside Energy Group Ltd. broke down last year. Bloomberg News reported last year that ADNOC was in the early stages of evaluating Santos as a possible acquisition target as it seeks to ramp up its gas investments oversea

Some investors have urged Santos to split its coveted LNG assets from oil operations in Alaska and its domestic gas business in Australia to cash in on higher valuations.