SYDNEY, Dec 7 Reuters Australia39;s Woodside Energy and Santos said on Thursday they were in preliminary talks to create an A80 billion 52 billion global oil and gas giant, as consolidation among international energy firms intensifies.

Combining two of Australia39;s largest oil and gas producers would be the largest corporate deal in the country for several years, during which buyout activity has been subdued by rising interest rates and financial market volatility.

Both companies face rising pressures of decarbonisation as well as challenges in their current projects.

Perthbased Woodside, the larger of the two, said the talks with Santos were confidential and incomplete and that there was no certainty a deal would materialise.

Woodside continuously assesses a range of opportunities to create and deliver value for shareholders, it said in a statement to the Australian stock exchange.

Its market capitalisation stands at A56.91 billion, while Santos is valued at A22.1 billion.

A merger of the two would come under close scrutiny from Australia39;s competition regulator, which has been toughening its stance towards allowing takeovers in concentrated sectors.

The ACCC is aware of public reports of the potential transaction, a spokesperson for the Australian Competition and Consumer Commission said. If the potential transaction progresses, the ACCC would consider if a public merger review into the impact on competition is required.

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