Kevin Gallagher, Santos in Malcolm Turnbull’s sights

As Australia’s biggest gas producers face a grilling from the PM today, the spotlight is brightest on Santos.

As the heads of Australia’s biggest gas producers are today hauled in front of Malcolm Turnbull for the second time in five weeks, the spotlight is shining brightest on Santos managing director Kevin Gallagher.

And there is every indication the Scottish-born executive is geared up for a confrontation with his industry counterparts.

The spotlight is on Mr Gallagher largely because the Santos-led Gladstone LNG project, built at a cost of $US18.5 billion ($24.5bn), has had to buy as much as half the gas it exports from tight domestic markets, where prices are surging and fears of shortages are growing.

Rightly or wrongly, GLNG and its past investment decisions are being painted by many as the major culprit in the east coast gas crisis.

And this is a blame game that suits the other two LNG projects at Gladstone (Shell’s Queensland Curtis LNG plant and the Australia Pacific LNG plant run by Origin Energy and ConocoPhillips) that, at least for now, can both supply gas export commitments from CSG fields developed as part of their projects.

Compounding the problems of Mr Gallagher, who joined Santos in February last year, is that Santos has three GLNG partners (France’s Total, Malaysia’s Petronas and Korea Gas) who all, not just a majority, need to be on the same page if any changes are made that help ease tight domestic markets.

And it is fair to say that none of the other parties have even a fraction of the interest of Santos, one of Australia’s biggest oil and gas producers, in keeping the Prime Minister happy and preserving their reputation among the Australian public.

GLNG is in its gas-short position after it approved two production trains at Gladstone in 2011 without having enough gas reserves to supply them.

At the time, Santos said it would need to buy some third-party gas to feed the two trains, but the amount needed grew as the project progressed.

Meanwhile, other sources of gas Santos had expected to fill the gap, such as the Narrabri coal seam gas project in NSW and shale gas, did not eventuate.

Mr Gallagher, a former Woodside and Clough executive, is not shying away from a robust meeting today.

Last night, on Sky Business’s Ticky program, he said the notion that GLNG was the only one of the three Gladstone projects that was not a “net contributor” to domestic markets was a “fake construct” of the other two exporters designed to put the spotlight on GLNG’s operating model.