Oil & Gas

Further delays for Barossa LNG as Santos loses court appeal

Santos’ (ASX:STO) appeal to restart drilling at its Barossa gas development offshore Australia that is planned to backfill the Darwin LNG export terminal has been dismissed adding further uncertainty and delays for the project.

On Friday, the Federal Court dismissed the appeal from Justice Bromberg’s decision in September, which set aside regulator NOPSEMA’s approval of the Barossa Gas Project’s Drilling Environment Plan.

A full bench upheld the initial judgment that the company did not adequately consult Traditional Owners when preparing its environmental plan for NOPSEMA.

In September, Santos was ordered to stop drilling at its $3.6 billion Barossa gas project off northern Australia by a Federal Court following a successful challenge from an indigenous group against environmental approvals for drilling and completion activities.

Santos said today that it has consulted with Traditional Owners and their representative bodies on the Barossa Gas Project since 2016 and will continue to do so, taking into account the guidance provided by the Court.

“Santos has always sought to meet its consultation responsibilities and is continuing the process of revising the Drilling Environment Plan to address the matters contained in the judgement,” said Santos.

“Further, Santos will now proceed with applications for all remaining approvals in accordance with the guidance provided by the Court,” added the company.

As a result, Santos does not anticipate any material cost or schedule impact, and first gas from the Barossa Gas Project remains on track to be delivered in the first half of 2025.

However, this seems ambitious, as Santos will now have to resubmit a major Environmental Plan to the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

Credit Suisse analyst Saul Kavonic wrote today that this could trigger a material delay to the project and “potentially take several months or longer, as NOPSEMA needs to consider a novel consultation framework and are under heightened scrutiny”.

The Barossa Gas Project is approximately 46% complete.

Santos’ partners in the Barossa project are South Korean energy company SK E&S and Japan’s top power generator JERA, a joint venture between Tokyo Electric Power and Chubu Electric Power.

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