Santos cuts capex guidance on Barossa delay

afr.com:

Santos lowered its guidance for capital expenditure this year amid a delay in drilling at its Barossa gas project in the Timor Sea, but it is still aiming to resume work at the site by the year-end after resubmitting the environment plan for the controversial venture.

Capex directed to growth projects this year was now likely to be between $US1.5 billion ($2.2 billion) and $US1.6 billion, rather than about $US1.8 billion, Santos said on Thursday in a quarterly report in which it also marginally downgraded guidance for annual production.

Santos had to cease drilling in the Barossa gas field north of the Tiwi Islands due to a court ruling. 

The oil and gas producer cited “phasing of spend” as the reason behind the reduction in growth capex, which Citigroup analysts ascribed directly to the delay in approvals for the $5.8 billion Barossa project, the regulatory clearance for which was overturned last year by a court ruling.

The broker said that Santos resubmitted the Barossa environmental plan this week, after having to significantly widen consultation with Indigenous communities as a result of the court decision.

Drilling at the offshore gas field, about 265 kilometres north of Darwin, had to be suspended last year after a court overturned the environmental approval, effectively agreeing with Tiwi Island elders they had not been fully consulted on the project. That decision was later upheld in the Federal Court.

Santos said in its June quarter report that the drilling rig for the Barossa wells remained on standby off the coast of Darwin awaiting approval.

“Assuming that drilling recommences before end-2023 and that the gas export pipeline commences installation in 2023, the Barossa project remains on target to commence