Santos’ warning to Madeleine King about ‘dire’ offshore gas approvals regime

Gas giant Santos warned Resources Minister Madeleine King the offshore gas approvals regime was in a “dire” state as it implored her to urgently fix the system blamed for stalling its $5.8 billion Barossa project.

In a joint letter with the project’s Japan and South Korean-based partners, Santos boss Kevin Gallagher said it was impossible to undertake proper consultation if there was no regulatory certainty once approval was granted.

The newly released letter was sent to Ms King on October 6 — a week after the Federal Court overturned Woodside’s approval to start seismic testing at the Scarborough project due to inadequate consultation.

The Barossa project was held up in a similar legal battle with traditional owners, causing delays, which Santos estimates cost the joint venture about $450 million.

Ms King has since promised to develop “clear and unambiguous” consultation requirements for offshore gas projects — a commitment applauded in the industry.

The letter, released under freedom of information, offers an insight into just how concerned Santos and its joint venture partners, South Korea-based SK E&S and Japan-based JERA Co, were about delays to the project and implications for gas supply to the Asian countries.

“The Barossa joint venture is extremely concerned about ongoing delays and, more broadly, the dire state of Australia’s offshore petroleum approvals regime,” the heads of the three companies wrote.

‘For JERA and SK, this has adverse and serious consequences for stable LNG supply to Japan and Korea from 2025, when both countries had factored Barossa LNG volumes into their energy mix.”

With the Barossa project 60 per cent complete, the companies warned further hold-ups with approvals risked causing cost blowouts and delays to LNG production — putting at risk contracts that had already been signed with customers.

The partners requested a meeting with Ms King as they pleaded with the Federal Government to urgently put in place regulations that “provided clarity and certainty” for the industry.

“We do not accept the premise that this is a failure of industry or its consultation processes,” the letter read.

“We are committed to maintaining high standards of consultation with stakeholders, including Traditional Owners. However, it is impossible to undertake effective consultation if there is no regulatory certainty when an approval is granted.”

The companies also wanted extra certainty for projects that reached a final investment decision after securing approval.

“The events of the last 18 months have eroded confidence in the current regulatory approvals regime, as it fails to deliver certainty of cost, schedule and ultimately the ability to complete a sanctioned project,” they said.

Work to clarify the consultation requirements was already underway before Santos sent the letter, with Ms King telling 6PR radio on October 3 that she accepted the need to review the requirements.

“There is confusion around what consultation actually entails, and we do need to fix that, and we’re working on that now,” she said.

In January, the minister released a discussed paper canvassing options to simplify the requirements without diluting the obligation on companies to properly consult.

Ms King last week introduced legislation that would hand her the power to change the consultation requirements after the review was finished.

The Greens and environmental campaigns believe it is all part of an attempt to sidestep Indigenous groups to help fast-track new gas projects.

WA Greens senator and resources spokeswoman Dorinda Cox claimed the letter was the “smoking gun” that proved Labor was doing the “bidding” of gas companies to pass laws that would silence First Nations communities and weaken environmental laws.

Ms King said the new Bill would simply allow the Federal Government to respond to the recommendations of the review.

She said there would be no change to environmental assessments, no watering down of environmental standards or fast-tracking of projects.

“The Government is consulting on ways to make consultation clearer for offshore resources projects,” she said.

“Environmental organisations, First Nations groups, industry, and resources companies have all told us that our system of consultation is not working effectively.

“We are happy to work with stakeholders on sensible amendments to the current bill to give everyone further confidence about the intent of the changes.