Kevin Gallagher urges politicians to back gas and insists he is in no rush to leave top job at Santos

Santos chief executive Kevin Gallagher has dismissed suggestions he will leave the business when his loyalty bonus is paid.

The boss of oil and gas company Santos, Kevin Gallagher, said whoever wins the federal election will need to be brave and make sound policy choices to bolster energy security.

“To government – and whoever may form government – I say, ‘don’t be misled by self-interest of false prophets, pushing unrealistic and damaging narratives that risk leaving Australians with higher energy prices, job losses and an unstable energy system’,” Mr Gallagher told shareholders on Thursday.

Safeguarding domestic gas supplies has emerged as a major election issue, and Santos stands to benefit from the Coalition’s energy policy because it is a major buyer from the domestic market to meet contracted export volumes.

The Australian Energy Market Operator has warned that the country’s east coast will experience gas shortages from 2029, an outlook that the likes of Santos have said should kickstart urgent approvals on new gas developments.

But many new developments have been stalled by environmentalist pressure.

Mr Gallagher also dismissed suggestions that he will step down from the top job after pocketing an executive bonus, pledging to shareholders that he still has plenty of work to do.

Mr Gallagher is nearing 10 years at Santos and he is in line for a loyalty bonus of around $6m. The so-called golden handcuff award ties him to Santos until the end of this year, and was originally designed to keep him out of the race for the top job at Woodside, the main rival to Santos, which went to Meg O’Neill.

The Australian reported that Mr Gallagher would leave after the granting of his entitlement and market attention has focused on who will replace him.

“Despite the rumours to the contrary, I’m not planning on going anywhere anytime soon. There is still plenty for me to do.” Mr Gallagher said.

Mr Gallagher’s determination comes as Santos enters a critical phase. It is poised to complete works on two major growth projects, which it has insisted will deliver the share price rewards investors have sought.

Shares in the company hit a four-year low this week as the trade war stoked global recession fears which would be devastating for oil prices, frustrating shareholders which have urged the company to unlock residual value.

Mr Gallagher has insisted Santos will soon see an uplift as its Northern Territory Barossa LNG development and its Alaskan Pikka oil project comes online. Mr Gallagher on Thursday said the $5.7bn Barossa development is now 95 per cent complete and first gas is expected in the third quarter of this year after a drawn-out timeline held up in court by an unsuccessful cultural heritage claim.

Santos is nearing the competition of its Barossa LNG project, which has drawn the ire of opponents. Picture: Tamati Smith/Getty Images

Pikka is expected to be operational mid-2026, Santos said, though the company has indicated it could arrive earlier.

Although investors have supported the investment, the capital expenditure has strained Santos’ capacity to bolster shareholder returns. The company has implemented a revised dividend policy with the aim of correcting this.

From 2026, Santos has promised to return at least 60 per cent of free cash flow to investors up from the previous target of 40 per cent.

The higher shareholder return pleased some investors, particularly retail shareholders who prioritise franked dividends. But by returning more cash to investors, the company risks disappointing other who worry about the capacity of Santos to invest in longer term projects.

Mr Gallagher on Thursday stressed Santos has capacity for future investment, and a plethora of attractive options.

Mr Gallagher said further investment in Alaska, PNG and the NT was viable, though he said approving the controversial gas project in Narrabri in NSW would not be possible until the development had secured all regulatory approvals.

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, and much needed as the region is poised to suffer structural deficits within years.

The Coalition has said it will force Queensland LNG exporters to withhold about 10-20 per cent of domestic supplies from uncontracted agreements in an effort to force down prices to $10/GJ from its current $14/GJ levels.

Shell – which majority-owns the Queensland Curtis LNG (QCLNG) – and Origin, a near one-third owner of the Australian Pacific LNG (APLNG) facility, are on course to be the biggest losers from the Coalition plan. Global giants such as ­ConocoPhillips, Sinopec and Tokyo Gas are also set to face lower LNG sales.

In contrast, Santos – which owns Queensland’s third LNG facility, Gladstone LNG (GLNG) – is on course to be a major victor.

Opposition energy spokesman Ted O’Brien, however, hinted the situation could be in the crosshairs of the Coalition should it win power.

“We’ve made it very clear that within the first 100 days of government we will be settling new arrangements with the gas industry. That includes all three. We cannot continue to have a situation where we have one of our major gas consortium taking from the domestic market and making negative contributions. That will be part of the negotiations,” Mr O’Brien said.

Originally published as Kevin Gallagher urges politicians to back gas and insists he is in no rush to leave top job at Santos