Santos hits snag at Barossa as Australian court suspend drilling permit

The Federal Court of Australia has ordered Santos to suspend drilling at its $3.6bn Barossa gas project after it found the operator failed to properly consult the people of the Tiwi Islands.

Traditional landowners led by Dennis Tipakalippa challenged in June the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA)’s decision to approve the Barossa dilling campaign before checking whether Santos had carried out adequate consultation with all relevant parties.

The court on Wednesday ruled against the drilling activities, which were to occur at a site in the Timor Sea, approximately 140 km north of the Tiwi Islands. A Valaris MS-1 semisub rig (pictured) was contracted for the job.

“Today’s decision puts oil and gas companies on notice. It sets a new standard about the consultation that companies are required to conduct with First Nations peoples before drilling in the sea,” said Alina Leikin, special counsel at Environmental Defenders Office. 

Barossa’s first gas production is targeted for the first half of 2025. The project comprises an FPSO vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline. Santos’ partners in the Barossa project are South Korea’s SK E&S and Japan’s JERA.

Santos described the ruling as a “disappointing outcome”, adding that the drilling activities will be suspended pending a favourable appeal outcome by the full Federal Court or the approval of a fresh environmental plan. 

“Project approval uncertainty is a public policy issue that should be urgently addressed by Australian governments to reduce risk for trade and investment in projects around the country,” the company said in an ASX regulatory filing.

According to the operator, the gas project is about 46% complete and there is headroom in the project cost contingency as the drilling activities are not on the critical path for the project.