Santos courts controversy on Barossa gas

Santos reiterated that view in its quarterly report, noting construction at Barossa was 68 per cent complete.

“Assuming that drilling re-commences before end-2023 and that the GEP [gas export pipeline] commences installation in 2023, the Barossa project remains on target to commence production in the first half of 2025 and within current cost guidance,” the company said.

Greenwashing claims

However, activist shareholder group the Australasian Centre for Corporate Responsibility cast doubt on the comments.

“Investors will be questioning Santos on how it can lose a year in the drilling schedule and still be on track,” ACCR executive director Brynn O’Brien said in a statement released soon after Santos’ quarterly report.

“And what gives Santos confidence that drilling will recommence this year, despite the drilling rig reportedly being needed for a separate contractual obligation?”

The ACCR is already locked in a court battle with Santos over allegations of greenwashing over the oil and gas producer’s “clean energy” claims.

RBC Capital Markets analyst Gordon Ramsay said delivering Barossa on time and budget “is becoming more of a stretch target as we get close to year-end”. Other analysts are already assuming a delay to the start of production.

Santos’ larger peer Woodside Energy is caught in a similar situation with the offshore petroleum regulator over approvals for its $16.5 billion Scarborough gas project in Western Australia. Woodside CEO Meg O’Neill on Wednesday called for “urgent” reforms to the offshore approvals process, citing the threat of delays and increased costs at the project in Woodside’s quarterly report.

Woodside is also still holding to its target of starting shipments from Scarborough and its associated Pluto LNG expansion project in 2026.

Santos posted revenue in the September quarter of $US1.436 billion, roughly in line with market expectations, as both output and prices edged higher. Sales, however, were down 25 per cent from the September quarter last year due to lower prices for LNG and crude oil.

The company retained its guidance for full-year production, capital expenditure and costs.

Shares in Santos were marginally stronger just before midday, up 3.5¢ at $7.885.

Mr Gallagher told The Australian Financial Review Energy & Climate Summit last week that Santos was paying about $US10 million ($15.7 million) a month for its idled rig off the coast of the Northern Territory after the Federal Court found late last year that the company had not adequately consulted traditional owners in the Timor Sea on the project.

Japanese and Korean customers own 50 per cent of the project.

The report comes as some investors including Melbourne-based L1 Capital are pushing the board to consider a break-up of the company, citing what they see as the stock’s persistent underperformance. L1 believes the board should examine splitting Santos’ LNG assets from its conventional oil and gas business.