Santos will sack 200 people as project delays spoil returns
Vesna PoljakCompanies editorMay 15, 2024 – 4.40pmListen to this article3 minSantos blamed delays to its major growth projects for a decision to slash 200 jobs, mainly in Perth, as gas developments are held up in regulatory issues and legal challenges.
The reliance on new projects has taken on greater importance at Santos because many of its legacy assets are being depleted. One of its big growth bets, the $5.8 billion Barossa gas development off Darwin in the Timor Sea, was held up by an unsuccessful Federal Court challenge funded by environmental activists.
The now depleted Bayu-Undan gasfield in the Timor Sea where Santos plans to store CO₂.
A Federal Court judge in January ruled that claims of risks to cultural heritage relied on contradictory and false evidence. Some of the evidence presented by the Environmental Defenders Office was “so lacking in integrity that no weight can be placed”, the court found, adding Indigenous witnesses may have been subject to “subtle coaching”.
In a statement on Wednesday, Santos said: “New project approvals are taking longer, meaning work programs are more sequenced than in the past and some growth activities have been delayed.”
Santos said it had reviewed the performance of one of its three regional units – spanning Western Australia, the Northern Territory and East Timor – “to ensure our workforce is aligned to the company’s strategy and disciplined, low-cost operating model”.
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$7.720 -0.13%View STO related articlesMay 23Aug 23Nov 23May 246.7507.2007.6508.1008.550Updated: May 16, 2024 – 3.42am. Data is 20 mins delayed.AdvertisementThat business supports the Bayu-Undan gas field supplying the Darwin LNG project, which is expected to cease production this year. It produced just 0.4 million tonnes of LNG in 2023 as it reaches the end of its natural life.
Santos has other ideas for Darwin and Bayu-Undan, however. It is targeting a final investment decision next year on repurposing it for carbon capture and storage capable of putting 10 million tonnes of carbon away a year. And Darwin LNG will instead take gas from Barossa, which is 73 per cent complete and on track for first gas in 2025.
Santos mobilised a drilling rig to lay pipe that will skirt the Tiwi Islands within hours of the Federal Court’s ruling, after spending $US10 million ($15.7 million) a month to have the machinery lie idle while the project’s legal fate was decided.
In WA, the company faces similarly ageing fields, which meant its share of the state’s domestic gas production tumbled 28 per cent to 99 petajoules last year. Santos is also trying to do carbon capture and storage in WA.
“With some late-life assets nearing closure, there is an increasing near-term focus on capital-intensive decommissioning activities,” the company said.
“The company will continue to optimise its workforce to ensure it has the right capabilities and is the right size to deliver our business plans safely, efficiently and effectively.”
The job losses include contractors.
Vesna Poljak is the Companies editor. She was previously the Markets editor with a special interest in the investment industry, hedge funds and accounting. She is based in the Sydney newsroom. Connect with Vesna on Twitter. Email Vesna at vpoljak@copyright link
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