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Australian player wins legal battle, gas megaproject back on track

Australia’s Federal Court dismisses Tiwi Islanders’ challenge to Barossa development

Australia’s gas heavyweight Santos has been given the green light to install the entirety of the subsea pipeline infrastructure for its US$3.6 billion Barossa gas project offshore Australia, after winning a legal battle against a group of Tiwi Islands elders.

Santos said it welcomed the Federal Court of Australia’s Monday ruling in the case of Munkara versus Santos NA Barossa Pty Ltd (No.3).

“The decision was in favour of Santos, with the Court dismissing the application and discharging the injunction that prevented pipelay activities south of the kilometre 86 (KP86) point along the Barossa Gas Export Pipeline (GEP),” the operator said.

“As per the ruling and in accordance with the Environment Plan in force for the activity, Santos will continue pipelaying activity for the Barossa gas project.”

The court’s decision paves the way for pipeline engineering, procurement, construction and installation contractor Allseas to resume the GEP installation with its dynamically positioned Class 3 (DP3) pipelay vessel Audacia — work that had been scheduled to start last October and be completed in April 2024.

The GEP is a 262-kilometre, 26-inch diameter pipeline that will connect the Barossa field to the Darwin Pipeline Duplication (DPD) which, subject to government approvals, is itself scheduled to be installed this year.

The Australian Financial Review (AFR) reported that Justice Natalie Charlesworth on Monday dismissed claims by a group of Tiwi Islanders that the proposed location of the Barossa GEP would damage Sea Country, dreaming tracks, Songlines and areas of cultural significance including burial sites and animal habitats.

Australia’s Federal Court on 15 November 2023 had extended an injunction from earlier that month that had halted pipelaying operations for Santos’ Barossa project until a hearing of claims over the approval process.

However, the latter injunction only applied to the part of the pipeline infrastructure as it runs southward from the Timor Sea past Melville Island to the Darwin LNG project, which will use Barossa’s gas as feedstock.

“Without the pipeline the production licence held by the Barossa joint venture is worthless, and the significant investment in the Barossa Gas Project to date… together with the anticipated profits, will be lost,” Santos told The Sydney Morning Herald in a statement at the time.

The court’s original injunction came as contractor Allseas was ready to commence installation of the Barossa GEP — Australia’s offshore regulator NOPSEMA had earlier approved the Environment Plan for this campaign — after a legal challenge by an Indigenous man, Simon Munkara, who alleged installing the pipeline would impact submerged Tiwi cultural heritage, thereby creating a new environmental risk.

“The litigation against Santos is not funded by traditional owners or Indigenous communities, but by the Environmental Defenders Office. As we understand it, the sourcing of these are government grants, non-transparent donations and other opaque arrangements,” The Sydney Morning Herald quoted Santos chief executive Kevin Gallagher.

The Barossa operator to date has maintained that the legal challenges to the environmental approvals for its Barossa development drilling and pipeline installation work have neither increased the project capex nor derailed its schedule with production start-up still targeted for the first half of 2025.

Australian Energy Producers (formerly APPEA) welcomed Monday’s court decision to reaffirm key environmental approvals for Santos’ Barossa project as a positive step to restoring investor and business confidence.

“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,” Australian Energy Producers chief executive Samantha McCulloch said.

“Australia’s oil and gas industry has always sought better regulation, not less regulation.”

She acknowledged that comprehensive and effective consultation with Traditional Owners has been an important part of the work of Australia’s oil and gas sector for decades and that the industry agency remains 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.”

McCulloch added that reform of Australia’s 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,” she said.

Australian Energy Producers added the green light for the Barossa project would deliver significant and wide-ranging economic benefits, support thousands of new jobs, deliver critical stimulus into local communities as well as producing much-needed new gas supply to underpin energy security in Australia and the region.

Santos’ share price was up 4.1% soon after Monday’s favourable court ruling, reaching an intra-day high of $7.87, the AFR reported.

Updated to include Australian Energy Producers’ comments.

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