Santos is pushing ahead with its contentious Barossa gas megaproject despite a court injunction banning the fossil fuel giant from drilling at the site.
A group of Tiwi Islands traditional owners won a Federal Court bid last year to throw out a drilling approval at the multimillion-dollar gas field 265km northwest of Darwin.
But in its September quarter update on Thursday Santos maintained it was on track to open Barossa on schedule and within cost guidance, with 68 per cent of the project completed.
Despite awaiting approvals, the company revealed its plans to begin installing underwater gas pipelines this year after an independent expert concluded there were no specific “underwater cultural heritage places” along the route.
This comes despite no indication when drilling operations will be allowed to restart, with the company reportedly paying $US350 million ($A552 million) over the past year for a drill rig to sit idle off the coast of Darwin.
“Investors will be questioning Santos on how it can lose a year in the drilling schedule and still be on track,” Brynn O’Brien, executive director at the Australasian Centre for Corporate Responsibility, said.
“And what gives Santos confidence that drilling will recommence this year, despite the drilling rig reportedly being needed for a separate contractual obligation?”
RBC Capital Markets analyst Gordon Ramsay said Barossa will not meet its startup target of early 2025 unless drilling re-commences and the gas export pipeline is installed before the end of 2023.
“Delivering Barossa on time and budget is becoming more of a stretch target as we get close to year-end,” he said.
Santos reported sales revenue of $US1.4 billion ($A2.2 billion) for the quarter.
“Santos’ other major project developments – Pikka oil, Moomba CCS and Papua LNG – appear to be progressing well,” Mr Ramsay said.
An increase in crude oil output at Santos’ Papua New Guinean operations lifted production slightly higher than the previous quarter to 23.3 million barrels of oil equivalent.
Santos expects the first oil at its Alaskan Pikka fields in 2026 with an initial production rate of 80,000 barrels per day.
“Free cash flow of $US1.6 billion ($A2.5 billion) year-to-date positions the company well to deliver shareholder returns, backfill and sustain our existing business, while also investing in our major projects and progressing our decarbonisation plans,” Santos CEO Kevin Gallagher said.
The results came ahead of news Santos is being taken to the Federal Court by Australia’s energy regulator for allegedly breaching its record-keeping obligations at day-ahead auctions.
Santos said it was “disappointed” the proceedings had been brought against it and maintained the alleged breaches had no impact on supply or price in the east coast domestic gas market.
Santos shares had fallen 0.4 per cent with half an hour left in Thursday trading.