Barossa concept; Source: Santos

Victor emerges in court battle over development of giant gas project off Australia

Australian energy player Santos has won a court case, which enables it to continue with its planned work on the Barossa gas field development project offshore Australia. 

Barossa concept; Source: Santos

The FID for the Barossa project was taken in 2021, kick-starting the $600 million investment in the Darwin LNG life extension and pipeline tie-in projects to extend the facility life for around 20 years. The Federal Court of Australia granted an interim injunction on November 2, 2023, to prevent Santos from starting to lay the Barossa gas export pipeline (GEP) until November 13, 2023.

This was done due to an application made by Simon Munkara, seeking an order to make the Australian energy giant revise and resubmit the environment plan (EP) that was accepted by the regulator, NOPSEMA, in March 2020. Afterward, the Federal Court of Australia issued a ruling, enabling pipelay activities to begin on an 86 km section of pipeline for the Barossa GEP.

In line with the ruling, Santos confirmed that no activity would occur south of kilometer point 86 (KP86). In response to the Federal Court’s decision, Australian Energy Producers underlined that the decision was further evidence of “the urgent need” for the Australian government to provide certainty for businesses and fix the broken offshore regulatory approvals system, as the economic and energy security of the country and its international partners were being damaged.

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However, things have now changed, as the final decision of the Federal Court of Australia in the case of Munkara versus Santos NA Barossa is in favor of the Australian giant, with the court dismissing the application and discharging the injunction that prevented pipelay activities south of the kilometer 86 (KP86) point along the Barossa GEP. As a result, Santos will continue the pipelaying activity for the Barossa gas project per the environmental plan in force for the activity.

Furthermore, Australian Energy Producers have welcomed the court’s decision to reaffirm key environmental approvals for the Santos Barossa project as “a positive step to restoring investor and business confidence.”  According to Australian Energy Producers, the green light for this project will deliver “significant and wide-ranging” economic benefits, supporting thousands of new jobs, delivering stimulus into local communities as well as producing “much-needed” new gas supply to underpin energy security in Australia and the region.

Samantha McCulloch, Australian Energy Producers’ Chief Executive, commented: “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. Australia’s oil and gas industry has always sought better regulation, not less regulation.

“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.

“Reform of the offshore approvals system is urgently needed to put an end to the lawfare as activists seek to exploit the ambiguities in the regulations. We look forward to working with the Australian government through its review of the offshore regulatory approvals system to ensure regulations provide clarity and certainty for industry while maintaining comprehensive and meaningful consultation with traditional owners and stakeholders.” 

The Barossa field development entails an FPSO vessel, subsea production wells, supporting subsea infrastructure, and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline. The first gas production is targeted for the first half of 2025.

Santos is currently engaged in preliminary discussions with Woodside for a potential A$79.09 billion (about $52.19 billion) merger between these two Australian energy giants. If the two heavyweights come together, the merger is anticipated to unlock more growth opportunities and create an Australian gas market giant.