Santos share price plunges 3% on Federal Court blow

ASX 200 investors are mulling the future of Santos' $5.7 billion Barossa Gas Project.

| More on:
sad looking petroleum worker standing next to oil drill

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you've been watching the charts, you may have noticed that the Santos Ltd (ASX: STO) share price took a rapid 2.6% tumble in afternoon trade.

Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock were trading almost flat at $7.73 before plunging to $7.52 apiece. At the time of writing, shares have regained some ground, trading for $7.53 which leaves the Santos share price down 2.71%.

Here's what's happening.

Santos share price battered by court ruling

On 24 October we reported on new potential headwinds facing the Santos share price amid a fresh legal challenge to the company's $5.7 billion Barossa Gas Project.

The project, located in the Timor Sea, is meant to supply Santos' LNG plant in Darwin, 200 kilometres away. Santos aims to have Barossa producing in the first half of 2025.

But the pipeline construction isn't sitting well with some Indigenous elders on the Tiwi Islands. They claim the undersea construction work could destroy ancient, culturally sensitive sites.

In a blow to the Santos share price, this afternoon the Federal Court suspended work on the pipeline project until 13 November. The court will hear arguments from the Tiwi Island plaintiffs before deciding whether to grant a full injunction.

Environmental Defenders Office lawyer Fiona Button is representing one of the plaintiffs, Simon Munkara.

Reading a statement from Munkara, Button told the court (quoted by The Australian Financial Review):

People lived on that land and there are burial grounds and other important things from our ancestors there, even though it has been a long time, and it's under the water, it was always our heritage, and it is all part of our beliefs.

On Tuesday (31 October), Santos released a statement saying that while the company "respects the cultural heritage of the Tiwi people" it would "vigorously defend" the Federal Court proceedings.

According to Santos:

The Environment Plan for the gas export pipeline installation was accepted by the regulator NOPSEMA in March 2020. Santos has, at all times, complied with the applicable regulations and requirements stipulated by NOPSEMA, and the regulator has monitored that compliance.

The ASX 200 energy company also said it rejected "allegations in the application that there are significant environmental impacts or risks in relation to submerged Tiwi cultural heritage".

If the court opts to grant a full injunction, it could have a material impact on the Santos share price.

According to the company, should that eventuate, "Santos will need to assess any impact on the schedule and cost of the Barossa Gas Project and will update the market accordingly."

Stay tuned.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

oil and gas worker checks phone on site in front of oil and gas equipment
Energy Shares

Top investment bank downgrades ASX 200 oil stock following trading update

This big oil stock is being punished by investors...

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

ASX 200 energy shares mixed despite strong quarterlies

Investors were originally positive on all three early in the session.

Read more »

a man holds his arms out and shrugs his shoulders as if indicating he doesn't know the answer to a question he's been asked.
Energy Shares

Boss Energy share price falls despite 'significant milestone'

How did Boss Energy perform during the quarter? Let's find out.

Read more »

Worker inspecting oil and gas pipeline.
Energy Shares

Are Woodside shares now a sell amid the company's US$900 million Tellurian acquisition?

The Woodside share price has come under pressure since the company announced its intention to acquire Tellurian.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Woodside share price slips despite $3 billion quarterly revenue

Investors are studying Woodside shares following the company’s quarterly results.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Energy Shares

This ASX 200 uranium stock could rise 25%+

Analysts at Bell Potter think now could be the time to snap up this hot stock.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Earnings Results

Paladin Energy share price in focus on quarterly production data

The uranium producer had a reasonably constructive quarter.

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Mergers & Acquisitions

Woodside share price falls despite $1.8 billion 'global LNG powerhouse' bid

Woodside is looking to increase its global gas footprint.

Read more »