The $4.7bn Barossa scheme is the largest oil and gas sector investment in Australia for a decade.
The $4.7bn Barossa scheme is the largest oil and gas sector investment in Australia for a decade.

Santos fires up gas project

Energy company Santos has flagged plans to build two new multimillion-dollar LNG processing trains in Darwin as part of the push by the federal and Northern Territory governments to turn the city into a gas processing hub.

Santos on Tuesday confirmed it would go ahead with the $4.7bn Barossa project to bring fresh offshore gas supplies to Darwin, as foreshadowed by The Australian.

The joint venture with SK E&S is expected to create about 600 jobs and keep the existing Darwin LNG plant operating until 2040.

The Territory government also revealed it is contemplating introducing a domestic gas reservation policy to ensure more of the benefits of future resources developments remain in the community and to help stimulate a local manufacturing economy.

Santos chief executive Kevin Gallagher said the Barossa scheme was the largest oil and gas sector investment in Australia for a decade, noting that the previous one - the $50bn Japanese-led Ichthys LNG project - was also Darwin-based.

Santos gained control of both Barossa and the Darwin LNG plant after snapping up ConocoPhillips' Northern Australia business for $2bn in 2019. Mr Gallagher said the Barossa decision "vindicated" his firm's purchase and could herald growth.

"The Darwin LNG project is a single-train project with approval for two further trains, and there's a lot of gas that has been discovered offshore (from) Northern Australia that has sat stranded for many, many years," Mr Gallagher said.

"We're happy to talk to anybody about bringing their gas through Darwin LNG facilities, and that would lead to expansion and building further trains here in Darwin and a lot more jobs to go with (them). Once we get on with progressing Barossa, we'll start looking at how we can bring some of those other resources - including the vast onshore resources - and the potential that provides here for Darwin."


Santos CEO Kevin Gallagher. Picture: Glenn Campbell
Santos CEO Kevin Gallagher. Picture: Glenn Campbell

He declined to discuss the economics of onshore plays in the NT's highly prospective Beetaloo Basin but said that Santos was "quite optimistic" about its initial test results and would be drilling further wells this year.

NT Deputy Chief Minister Nicole Manison said the best way for the Territory to tackle its notoriously high rates of disadvantage was to build a strong economy. Labor has previously ruled out introducing domestic gas reservation policies. Such policies have been opposed by the resources industry and, according to some analysts, were a factor in energy giant Inpex's decision not to build the Ichthys project in Western Australia.

But Ms Manison said there was "now an appetite for keeping gas here locally".

"We want to see the industry develop, but we also want to make sure that Territorians benefit from that gas through gas manufacturing," she said.

Labor is pushing to build a manufacturing precinct near Darwin port.

Mr Gallagher said the best way for Australian businesses to obtain cheaper gas was to "move closer to the source of the gas, (rather) than asking everybody to pipe it halfway across the ­country."

Santos could benefit from gas reservation because it has a large domestic supply business. Gas reservation policies could also help shore up support for onshore gas development in the face of opposition from green groups.

Ms Manison denied that her government's push towards resources development was in conflict with its emissions reduction policies. Mr Gallagher said technologies like carbon capture and storage could even present a profitable business opportunity.

Northern Australia Minister Keith Pitt said Santos's Barossa decision was a big show of confidence in the Australian economy in a year in which the resources sector was already on track to a new record with almost $300bn worth of exports.

Originally published as Santos fires up Darwin gas

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