Santos blocked from pipeline work on $5.3bn Barossa project in latest Federal Court blow

Santos cannot begin installing undersea pipelines for its $5.3bn Barossa project as planned due to cultural heritage risks, a Federal Court has ruled in a hammer blow to the company.

Santos cannot begin installing undersea pipelines for its $5.3bn Barossa project as planned due to cultural heritage risks, a Federal Court has ruled, in a hammer blow to the company’s hopes of producing first gas by early 2025.

Lawyers for Tiwi Islands traditional owner Simon Munkara this week sought an injunction from Federal Court judge Natalie Charlesworth to stop work on the 262km pipeline off the Tiwi Islands from beginning, insisting it would cause irreparable harm to traditional owners’ connection to sea country.

In a ruling on Thursday, Justice Charlesworth said there was merit to Mr Munkara’s argument and that it should be heard at a full hearing on November 13.

“I am satisfied that if the works would continue and Santos was found to be in breach … there would be irreparable damage to Mr Munkara,” Justice Charlesworth said.

Santos cannot begin work on the gas pipeline until a ruling from that hearing is issued.

Santos said the court ruling had not changed its timetable for the project, but said it would be conditional to how the November 13 hearing materialised.

Santos chief executive Kevin Gallagher. Picture: NCA NewsWire / Morgan Sette

The findings will heighten the financial burden on Santos’s plans to develop a new source of gas in the Timor Sea. Santos on Tuesday said it was not yet clear what impact an injunction would have on the project, but the South Australia-based company was struggling to get the development back on track.

Work on Santos’s Barossa gas facility has been suspended since last year after the Federal Court found the oil giant failed to consult local Indigenous people ­adequately on the development.

Santos is still waiting for offshore safety authority Nopsema to rule on its updated environment plan.

It cannot resume drilling until the regulator gives it the green light, but Santos has said it can only meet its production targets for first gas by early 2025 if work can resume by December 3.

“Guidance on Barossa cost and schedule remains unchanged. Santos will assess any impact on the schedule and cost of the Barossa gas project if the ­injunction is extended beyond November 13 and will update the market accordingly,” the company said in an announcement to the stock exchange.

Shares in Santos fell 3 per cent, or 23c, to $7.51 on Thursday.

Mr Munkara hailed the ruling. “We are serious about protecting our country. That is our obligation. I’m doing this for my kids, so that our culture can be passed on to future generations,” he said.

Protesters outside the Federal Court of Australia last year. Picture: Getty Images

Alina Leikin, special counsel for the Environmental Defenders Office, which is representing Mr Munkara, said it intended to push the Federal Court on November 13 to order Santos to submit another environment plan.

“We are very relieved. Santos’s crews were hours away from beginning work on this pipeline, which poses significant risks and impacts to our client’s sea country,” Ms Leikin said.

“We now have a chance to put forward our client’s reasons why Santos’s environment plan is not fit for purpose and must be revised and resubmitted.”

It had hoped that by installing the pipelines, it could mitigate the threat of delays that chief executive Kevin Gallagher said was costing the company millions of dollars as it was forced to pay for a drilling vessel that remains idle.

Santos has earmarked the project as a driver of future growth.

Gas produced from its offshore Barossa field will be transported to its Darwin LNG plant in the Northern Territory and is then likely to flow to lucrative export markets such as Japan.

However, a looming gas shortfall across the east coast could force shipments to flow to so-called LNG import facilities being constructed in NSW, and one proposed for South Australia.

Santos’s defeat will intensify calls from Australia’s oil and gas industry to tweak the country’s rules around consultations after a spate of legal victories for environmentalists and opponents to new fossil fuel developments.

Originally published as Santos blocked from pipeline work on $5.3bn Barossa project in latest Federal Court blow