Santos has initiated the first gas shipment from its $5.6 billion Barossa project, following delays spanning over a year. The liquefied natural gas (LNG) is en route to the Sakai terminal in Japan, departing from the Darwin LNG plant.
The company's quarterly report confirmed that gas from its offshore Timor Sea project has reached the Darwin LNG facility. The Barossa project, originally slated for early 2025, experienced significant setbacks, including a multi-month pause in pipeline construction in 2023 due to legal action by First Nations elders on the Tiwi Islands concerning sacred sites.
Concerns have been raised regarding a methane leak from the Darwin LNG plant's storage tank, which has been ongoing for two decades. Despite this, regulatory approvals permit the facility to store Barossa gas until 2050 without mandating a fix for the leak.
Energy analyst Saul Kavonic described the announcement as a "sigh of relief" for investors, emphasizing the importance of Santos achieving stable and full production rates. Mr. Kavonic also noted that Santos's projected production levels from 2027 represent a downgrade from investor expectations, partly attributable to the Barossa project's delays.
Santos further reported that its Alaskan Pikka project, which incurred an additional $200 million, is on schedule for its first oil production in Q1 2026, with a ramp-up to full production by mid-year. However, Mr. Kavonic predicted that the financial returns from both projects might not meet market expectations, citing growing investor frustration.
The company recorded $1.2 billion in sales revenue for the fourth quarter, marking a nine percent increase from the prior quarter. Its full-year sales revenue exceeded $4.9 billion. Unresolved governance issues within Santos were also mentioned, following the departure of the chief financial officer in October.
Kirsty Howey, director of the Environment Centre NT, stated that operating a leaking facility poses risks to Australia's climate and the health and safety of Darwin residents. Independent energy finance analyst Bruce Robertson argued that the leak should have been repaired prior to the first gas delivery. He suggested that the leak could increase Santos's costs, as emissions from the plant would likely be subject to the safeguard mechanism, requiring Santos to pay more to offset its emissions. The Barossa project is identified as Australia's highest-emitting LNG project.