Santos’ $5.3bn Barossa LNG win comes after Fed judge raised ‘lack of integrity’ concerns about claims

The Federal Court has delivered a stinging rebuke to the Environmental Defenders Office about ‘the lack of integrity’ in its challenge.

Santos can proceed with its $5.3bn Barossa LNG project after a Federal Court rejected a claim the gas giant’s proposed 262km pipeline would cause irreparable damage to First Nations people and their sites.

The decision marks a rare legal victory for the gas company, which had suffered a spate of defeats at the hands of environmentalists.

The ruling by Federal Court Judge Natalie Charlesworth offered a stinging critique of the claims put forward by the Environmental Defenders Office, which has taken a lead role in opposing the Barossa development.

“I have drawn conclusions about the lack of integrity in some aspects of the cultural mapping exercise, which undermined my confidence in the whole of it,” she said.

It also significantly boosts the company’s financial prospects, including its position in talks with Woodside over a potential merger.

Santos has earmarked the Barossa development as a driver of revenue growth and a project which will underpin its share price — which has recently been a source of investor frustration.

The case was brought late last year when Tiwi Islands traditional owner Simon Munkara said Santos had failed to consult and consider traditional owners’ connection to the sea, which he said would be irreparably damaged should the pipeline be constructed.

Justice Charlesworth in early November ordered a temporary stop work on some of the 262km pipeline off the Tiwi Islands before she could give a final ruling.

But in a major victory for Santos, Justice Charlesworth on Monday said she was unconvinced by the arguments the pipeline would cause irreparable harm for the traditional owners and their connection to the sea, and as a result Santos would not need to revise its environmental plan.

Shares in Santos rose nearly 4 per cent in the aftermath of the announcement as investors cheered the removal of the uncertainty over the project, which is set to produce its first gas by early 2025.

Santos chief executive Kevin Gallagher welcomed the ruling and told employees the company was poised to resume drilling and would move quickly to accelerate development.

“I can report the drilling rig has been mobilised and drilling activities will commence shortly,” Mr Gallagher said in an internal memo seen by The Australian.

He added: “This decision is not only good for Santos, but it will be of benefit to the whole industry, to the [National Offshore Petroleum Safety and Environmental Management Authority] and to government lawmakers. In addition, it is excellent news for Northern Territory jobs and business opportunities, the NT economy, federal government revenue, export income and trade and investment relationships in Asia.”

People gather at the front of Melbourne’s Federal Court of Australia in late 2022 in protest of the Barossa project.

Santos’s production timetable had until a few weeks back appeared in severe doubt. But Santos secured approval from the federal offshore regulator, the NOPSEMA, in late 2023 to proceed with a revised plan for drilling at the Barossa gas project in the Timor Sea.

Drilling had earlier been suspended for about a year after the Federal Court found the oil giant failed to consult local Indigenous people ­adequately, a tactic employed by opponents to new developments.

Critics of that tactic have argued environmentalists are capitalising on and using Indigenous people to oppose developments resource companies say will bring economic benefits and safeguard regional energy security. Environmentalist deny the claims.

Alex Hillman, lead analyst at the Australasian Centre for Corporate Responsibility, a leading opponent to fossil fuel projects, said the legal challenges had caused significant harm to Santos and its investors.

“While today’s court ruling may clear the way for Santos to restart its Barossa project after 16 months of delay, it leaves a colossal haemorrhage of shareholder money in its wake,” Mr Hillman said.

“We estimate that Santos’ regulatory delays could have cost the Barossa project $800m.”

The Environmental Defenders Office did not immediately respond to requests for comment, with sources indicating the agency was still digesting the ruling.

The judgement will fuel calls from Australia’s resource sector for the government to restrict similar legal challenges.

Santos chief executive Kevin Gallagher has urged Australia’s federal Labor government to narrow and define who must be consulted.

Samantha McCulloch, chief executive of the industry body, Australian Energy Producers, said the victory for Santos must not distract from the need for legislative changes.

“This brings to an end a period of significant uncertainty, substantial delays and costs incurred for the project as a result of a broken offshore environmental regulatory system,” Ms McCulloch said.

“Comprehensive and effective consultation with Traditional Owners has been an important part of the work of our sector for decades and we are committed to it. However, vague and ambiguous regulations cannot be allowed to continue holding up important energy projects, postponing new supply that is needed to deliver energy security, emissions reduction and substantial economic returns for Australians.”

The Australian last year exclusively reported the government was assuring the industry changes would be made, with Labor last week making the first tentative steps by calling for submissions on potential legislative changes.

Labor has drawn the ire of Australia’s gas industry with a spate of legislative changes the government said is needed to ensure domestic supplies at reasonable prices.

Australia is one of the world’s largest LNG exporters but domestic manufacturers have mounted an aggressive campaign over elevated domestic prices, triggered by a global energy crunch.

Australia’s east coast is seeing a rapidly dwindling supply which threatens to prolong higher prices, which the gas industry said must prioritise the approval of new developments.

But, new developments continue to be beset by delays in securing regulatory licences — which the industry said indicates Labor’s level of support for the industry.

The ruling on Monday may, however, aid Australia’s bilateral ties with two regional key allies. The Barossa project, in which Korea’s SK E&S and Japan’s JERA have stakes, has been earmarked to guarantee regional gas supplies, and Japan particularly has grown increasingly concerned about Canberra’s attitude towards gas.

The head of Japan’s biggest oil and gas producer last year warned Australia risks undermining global security through a decision to “quietly quit” the international gas trade.

Originally published as Santos’ $5.3bn Barossa LNG win comes after Fed judge raised ‘lack of integrity’ concerns about claims