Santos’ Narrabri project could help prevent gas crisis and bolster jobs, CEO says

CEO Kevin Gallagher says Australian authorities must approve its $3.5bn Narrabri project if they want to avert a looming east coast gas shortfall and safeguard jobs.

Santos CEO Kevin Gallagher. Picture: Brenton Edwards

Australian authorities should approve Santos’ Narrabri project if they are serious about averting a looming east coast gas shortfall and safeguarding domestic jobs, chief executive Kevin Gallagher says.

The Australian Energy Market Operator has warned the country’s east coast faces looming gas shortages as soon as 2026 and a material shortfall by 2028 – which the energy industry has said must be an urgent trigger for authorities to expedite new supplies.

But in comments that underscore the depth of frustrations as notable projects continue to be held-up, Mr Gallagher said the apparent refusal to approve the company’s proposed $3.5bn Narrabri project in NSW means domestic customers face higher prices.

“I find in ironic that politicians are quick to back LNG import terminals when there is gas under their feet that could prevent shortages and support jobs,” Mr Gallagher told The Australian.

“Removing barriers to the development of Narrabri should be at the top of this list because Narrabri gas will put downward pressure on domestic gas prices,” he said. “LNG imports will do the opposite unless they are subsidised by governments, but it would also be a very bad outcome for Australian taxpayers and consumers.”

Santos’ Moomba gas plant. Picture: Brenton Edwards

Santos has said it intends, if approved, to keep the gas produced for domestic use. The group could be ready to approve the Narrabri project as soon as this year, but it continues to be held up by a Native Title Tribunal process.

The project could play a major role in easing Australia’s east coast gas shortfall, but it has attracted strong opposition and the federal government is wary of the political fallout. Santos is seeking to tap some 1500 petajoules of gas reserves from the Narrabri project. Daily production of up to 200 terajoules has been predicted, accounting for about half of NSW’s current gas needs.

But while it remains held-up in regulatory uncertainty – Santos could turn its attention elsewhere as it examines potential new projects beyond its soon-to-be delivered developments in the Northern Territory and Alaska.

The projects shape as critical for Santos and Mr Gallagher amid shareholder frustration at the share price of the company.

Investor patience was on Wednesday tested again when the oil and gas company said annual profits fell more than 10 per cent amid lower production and reduced commodity prices.

Profit after tax fell to $US1.26bn ($1.99bn) for the 12 months to December 31 from $US1.42bn a year earlier, as revenues slumped 8.6 per cent to $US5.52bn from $6.03bn. Underlying profit fell 15.6 per cent to $US1.2bn. Santos blamed the decline on lower production and decreased prices for its product.

The result was below market expecexpectations,shares fell more than 4 per cent as a result.

Santos will pay a final dividend of US10.3c a share, unfranked, down 41 per cent from a year earlier. It takes its total dividend for the year to US23.3c a share, representing 40 per cent of free cash flow. That’s down from US26.2c in 2023. Annual production totalled 87.1 million barrels of oil equivalent.

Mr Gallagher said the company was, however, primed for growth. Santos said its $5.7bn Barossa LNG project is on schedule for first gas by the third quarter of this year, while its $US2.6bn project in Alaska is expected to produce first oil by 2025.

The NT project is set to be a major driver of Santos’ forecast for a better year. The company said it expected annual production to jump to between 90 to 97 MMBoe.

The results will frustrate some Santos shareholders, which have insisted the company has yet to unlock share price growth like some rivals. Mr Gallagher has acknowledged the frustration but insisted the company is poised to unlock growth.

In a move widely seen as a nod to those frustrations, Santos last year tweaked its dividend payments from 2026 as it moves to allay investor frustrations fuelled by a prolonged sluggish share price performance.

The dividend policy change, which will see Santos return at least 60 per cent of free cash flow to investors – up from the previous target of 40 per cent, pushed shares up more than 2 per cent as investors cheered the prospect of higher returns.

Originally published as Santos’ Narrabri project could help prevent gas crisis and bolster jobs, CEO says