Abu Dhabi National Oil Company, preparing an $18.7 billion bid for Santos , is likely to face close scrutiny from Australian regulators worried about local gas supply, but could win them over with pledges to speed up new projects,

But the offer for the ASX’s second-largest oil and gas producer has been met with a lukewarm reception from investors, who say the price could be higher.

Santos said XRG, an investment arm of the Abu Dhabi National Oil Company, had made an indicative cash offer of $5.76 a share, valuing the Adelaide-based company at $18.7bn. It represents a 28 per cent premium to Santos’s closing share price last week.