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Santos Limited

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Santos Ltd. (South Australia Northern Territory Oil Search) is an Australian energy company, the country's second-largest independent oil and gas producer.[2] In the 2020 Forbes Global 2000, Santos was ranked as the 1583rd-largest public company in the world.[3]

Santos Ltd.
Company typePublic
ASX: STO
IndustrieEnergy
Gegründet18 March 1954
Hauptsitz60 Flinders Street, Adelaide, South Australia
Key people
Kevin Gallagher, CEO
Produkte
RevenueUS$3.660 billion (2018)[1]
Increase US$0.727 billion (2018)[1]
Number of employees
2,190 (2018)
Websitesantos.com

Operations

 
Santos Ltd headquarters, Adelaide (2016)

Santos is one of Australia's domestic gas producers, supplying sales gas to all mainland Australian states and territories, ethane to Sydney, and oil and liquids to domestic and international customers.[4] The company's core business was built on gas and oil discoveries in the Cooper Basin, predominantly spanning north-east South Australia and South West Queensland. These gas reserves are one of the sources of natural gas to Australia's eastern states. Santos is the primary venture partner and operator of natural gas processing facilities at Moomba (in South Australia) and Ballera (in Queensland), and pipelines connecting those facilities with Adelaide, Sydney, Melbourne, Brisbane, Rockhampton and Mount Isa.[citation needed] One of the pipelines is the Moomba Adelaide Pipeline System which carries gas to Adelaide and regional South Australia.

It has made significant discoveries in the Browse Basin, off the northwest of Western Australia. On 22 August 2014 the company announced a major gas-condensate discovery at the Lasseter-1 exploration well in WA-274-P in the basin, in which Santos has a 30% interest in company with Chevron (50%) and Inpex (20%). It was the second major discovery by the company in the area in two years.[5]

Santos also loads product onto small Cape vessels at Port Bonython in South Australia.

 
Santos drill rig near Innamincka in Cooper Basin, 1959

Santos has its headquarters in Adelaide. It also has offices in Brisbane, Sydney, Perth and Jakarta. Since February 2016 the company's CEO has been Kevin Gallagher. He was preceded by David Knox.

In August 2018 Santos announced the acquisition of Australian oil and gas company Quadrant Energy for $2.15 billion. As part of the deal, Santos will obtain Quadrant's 80% stake in Dorado in the Bedout Basin in northern Western Australia.[6]

In May 2020 Santos completed its acquisition of ConocoPhillips’ northern Australia and Timor-Leste assets for US$1.265 billion as well as a contingent payment of US$200 million subject to a final investment decision (FID) on future project Barossa. This acquisition gave Santos the operatorship and control of ageing offshore assets in Bayu-Undan, subsea assets in the Timor Sea as well as in onshore gas plant Darwin LNG (DLNG). At the completion of the deal with ConocoPhillips the interest of Santos in these assets has been increased to 68.4%. Its interest in the future Barossa project increases to 62.5%.[7][8]

International activities

The company also participates in on- and off-shore oil and gas exploration and production ventures throughout Australia, in the Timor Gap, Indonesia, Papua New Guinea, India, Bangladesh, Egypt, Vietnam and Kyrgyzstan.[4]

Liquefied natural gas

Santos has an interest in the Darwin LNG project, exporting liquefied natural gas to customers in Japan. It is also a partner in the development of the Gladstone LNG project in Queensland and in the PNG LNG project.[4] On 7 September Santos pledged to divert 30 petajoules of gas from the Gladstone LNG plant slated for export into Australia's east coast market in 2018 and 2019, as part of efforts to avert government-imposed restrictions on gas exports to solve local gas shortages.[2] Because of shortages in its own supply of gas for export, Santos rely on purchasing gas from third parties to supply its overseas contracts.

Financial results

Santos' production for 2008 was 54.4 million barrels (8,650,000 m3) of oil equivalent.[1] Earnings before interest, taxes, depreciation, amortisations and exploration expenses for the period was A$2.8 billion, representing after tax profit of A$1.65 billion.[1] On 22 August 2014 the company said its oil production was at its highest level in six years. For the first half of 2014, Santos recorded sales revenue of $1.8 billion, an increase of 20% on the comparable period the previous year. Sales volumes rose by 5% to 28.9 million barrels of oil equivalent. As a result of the company writing off its investment in a coal seam gas project in Indonesia, the 2014 first-half profit being down 24% at $206 million.[5]

In 2015, Santos' financial troubles became more evident as the share price crashed to one third of its value from the previous year. It hit a 12-year low and has stayed low since. This occurred because of mounting debt and an oil price slump. CEO David Knox was forced to leave, with chairman Peter Coates stepping into the role and leading a strategic review of the gas company. Options of partial asset sale, even takeovers, has been speculated including "No options will be ruled out from consideration, but neither is any particular option a preferred course at this time," Coates said .[9]

Greenhouse gas emissions

In 2020, Santos was named on a list of Australia's 65 worst greenhouse gas emitting companies.[10] Following additional pressure from ethical investors, Santos announced a goal to reduce greenhouse gas emissions to achieve net zero emissions by 2040 using a combination of carbon capture and storage, renewable energy and offsetting through tree planting programs.[11] Santos' majority-owned Barossa project has been criticised for its future carbon emissions. If developed, Barossa will become the most carbon-intensive gas development in Australia. When the project was purchased from ConocoPhillips in 2020, it was projected to produce 1.5 tonnes of CO2 for every tonne of LNG. Santos claims it can use solar power[12] reduce this to 1.1 tonnes CO2 per tonne of LNG. Chemical engineer and industrial economist John Robert described the project as "a carbon-dioxide emissions factory, with an LNG by-product." Andrew Forrest described the project as "atrocious".[13][14]

Lobbying and political donations

Santos has engaged Adelaide-based consultancy Bespoke Approach to lobby the Australian Government and the State Governments of New South Wales[15] and Queensland.[16] Other lobbyists which have represented Santos include: Kreab Gavin Anderson (Australia) Ltd, Craig Emerson Economics[17] and Australian Public Affairs.[18][19]

In the financial year 2012–13, Santos Ltd gave donations directly to Labor, Liberal, LNP and National political parties at state and federal levels. Donations are tabled below.[20]

Jurisdiction Liberal/LNP Labor National
Federal $12,950 $50,829 $10,030
South Australia $34,367 $18,590
Queensland $18,303 $3,300
New South Wales $500
Western Australia $5,910 $2,550
Northern Territory $5,000
Tasmania $2,500
Sturt FEC (SA) $1000

Incidents

Moomba explosions, South Australia

On 1 January 2004 an explosion occurred at Santos' Moomba processing facility. The blast was traced to the Liquids Recovery Plant (LRP), where an inlet manifold and a related flange weld both failed after corrosion by mercury. Mercury was released along with a cloud of flammable gases including methane, ethane, propane and butane. Workers saw the cloud and raised the alarm, shutting down the plant and evacuating to designated safety points.[21] Some workers allegedly did not hear the emergency alarms.[22] The gas cloud ignited on contact with a heating unit 150 metres away, and an explosion followed. The plant was seriously damaged.[21]

Moomba workers who sought to remain anonymous told The Australian newspaper on 5 January that the company was running a "cowboy" operation, and that it was luck, not management that had prevented any loss of life. They also said that the emergency muster area was too close to the plant in the event of a major tank explosion.[22]

Gas supplies to South Australia and New South Wales were interrupted, leading to down-time in the manufacturing sector and short-term rationing measures in both states while repairs were made. Santos spent $40 million on remedial action following the incident. In 2011, the South Australian industrial relations court ruled that 13 employees had been placed at risk due to critical safety shortcomings. These included an inadequate risk assessment which failed to identify the likelihood of plant failing due to liquid metal rendering it brittle. The company pleaded guilty to breaching the Occupational Health Safety and Welfare Act after a SafeWork prosecution and was fined $84,000.[21]

Sidoarjo mud flow, Indonesia

 
NASA satellite image of the Sidoarjo mud flow site, 11 November 2008

In May 2006, the Sidoarjo mud flow disaster occurred in East Java, Indonesia. Controversy exists surrounding the probable cause of the disaster which has displaced approximately 10,000 people and covered villages, farms and industrial areas with mud. The eruption is ongoing, though since 2011 the rate of flow has reduced.[23]

Santos had stated in June 2006 that it maintained "appropriate insurance coverage for these types of occurrences".[24]

Port Bonython groundwater contamination, South Australia

 
Santos' Port Bonython facility and hydrocarbon export jetty, South Australia

In May 2008, groundwater contamination was reported to the Environment Protection Authority (EPA) following detection at Santos' Port Bonython site, Spencer Gulf, South Australia. Hydrocarbons were found floating on and in the groundwater. One hundred and fifty inspection wells were later established, and a 450-metre-long (1,480 ft) cement bentonite wall was constructed 'to stop the further spread of contamination off-site' including to the marine environment.[25][26] In May 2012, Santos reported declining rates of hydrocarbon recovery from groundwater extraction wells and claimed that their remediation efforts were working.[27]

Pilliga CSG wastewater spill, New South Wales

In 2011, a 10,000-litre spill of untreated coal seam gas water occurred impacting native vegetation and soil in the Pilliga forest. Coal seam gas extraction produces water that can contain lead, mercury, various salts and other heavy metals. Rehabilitation has been trying to restore this site[28] to remediate elevated contamination in the soil.[29]

Jackson oil spill, Queensland

In May 2013, an uncontrolled oil spill was reported in Santos' Zeus field near Jackson in Queensland's remote south-west. The flow lasted 'almost a week' before international experts were able to contain it. The rate of flow was estimated at 50,000 litres per day.[30]

Uranium contamination of Narrabri aquifers, New South Wales

In 2013, groundwater monitoring detected elevated levels of salinity and heavy metals near Santos' Tintsfield ponds in the Pilliga forest. Also it was reported that at the Bibblewindi ponds, uranium 20 times above the safe drinking levels was detected.[31] A NSW Government investigation into the incident determined the leak was "small, localised and contained" and drinking water sources and stock and domestic water sources were not impacted nor were they at risk.[32] The Investigation also found that the uranium detected was not from the pond's water, but was from naturally occurring Uranium in the surrounding soil that was mobilised from the leaking pond.[33]

Climate activism

In 2020, some Extinction Rebellion protesters stormed the Santos Building in Adelaide; some of them glued themselves to the building and the road outside. Police and Firemen had to remove them; the protesters were charged.[34][35]

In 2022, Aboriginal people from northern Australia filed a lawsuit against South Korea lending approximately A$950m (£530m) to Santos via the state-owned Export-Import Bank of Korea and the Korea Trade Insurance Corporation. This way, they aimed to prevent Santos from building a gas pipeline in the Timor Sea, near the Cape Fourcroy, a habitat for many marine species, and a place where many Aboriginal people hunt, live, and camp.[36]

Water resource use

 
Santos Ltd's water extraction volumes by source within South Australia 2009 to 2013

Santos' activities draw significantly on available water resources. In 2013, the three jurisdictions in which Santos withdrew the greatest volume of water were Indonesia (12.5 gigalitres), Queensland (7.5 gigalitres) and South Australia (7 gigalitres). The company's water resource extraction and use is published in an annual Sustainability Report.[37]

Sponsorship

 
Santos sponsors the Museum of Economic Botany at the Adelaide Botanic Garden.

Santos sponsors many community activities, events, institutions and projects in jurisdictions where they operate commercially. In October 2014, The Advertiser claimed that Santos spends $10 million annually on South Australian community groups, events and institutions.[38] Figures published in Santos' 2014 Sustainability Report state that $7,487,731 was spent on 'Community investment' in South Australia that financial year and $3,108,057 in Queensland. Other jurisdictions received between $5,000 (South Korea) and $775,255 (Western Australia) and the total 'community investment' spent across all regions during 2013–14 was $13,217,617.[39]

Recipients have included:

In South Australia

In Queensland

  • Queensland Art Gallery – $1.5 million AUD over 5 years[47]
  • Santos GLNG Food & Fire Fest
  • Queensland Police Service's Stay on Track Outback road safety campaign (2012–2014)[48]

Opposition to Santos sponsorship

In December 2014, photographs showing Queensland police vehicles featuring Santos company logos was criticised by anti-coal seam gas group Lock the Gate Alliance. Santos contributed approximately $40,000 to the road safety program "stay on track outback" which was described as valuable addition to a road safety campaign. Queensland Police commissioner Ian Stewart described the vehicles as "PR vehicles that we use at shows, we use at expos, all of those sorts of things just as any PR machine would be used by a company or another government organisation."[49]

Online activists referred to the sponsorship as a "conflict of interest" and "a bloody disgrace" with Stop Brisbane Coal Trains spokesman John Gordon calling for the logos to be removed.[48] Santos responded by stating that the company was "proud to support a program that promotes safe driving and is saving lives in outback Australia." Queensland's Police Minister Jack Dempsey defended the program and its sponsors stating "The Queensland Police Service's 'Stay on Track Outback' is a road safety program aimed at keeping communities safer and reducing road trauma in regional Queensland. It has been in place since 2012 thanks to support from a number of sponsors."[48]

In 2015, the Frack Free NT Alliance (a diverse group of opposing shale gas in the Northern Territory) called for the Darwin Festival to reject Santos sponsorship due to the company's involvement in shale gas exploration and development in the Northern Territory. Dayne Pratzky, a.k.a. Frackman, supported the call.[50]

In 2021 and 2022, Extinction Rebellion held protests at the Adelaide Botanic Garden to denounce Santos' sponsorship of the Santos Museum of Economic Botany.[51] [52] Extinction Rebellion spokesperson Ben Brooker described the arrangement, slated to last until 2029, as "a terrible stain on this treasured institution" and one that "goes absolutely against the letter and the spirit of the Garden's own charter, which of course has biodiversity and conservation at its heart", adding that "we just do not feel that those values are compatible with taking money from an incredibly destructive fossil fuel company".[53]

ANU divestment

In October 2014, the Australian National University (ANU) sold its shares in Santos and several other companies in the nation's most reported case of fossil fuel industry divestment. Santos responded by claiming that gas is necessary in the state's future energy mix, and The Advertiser published its economic value to South Australia. It was reported that Santos employed 3500 people nationally as well as thousands of contractors, and had a $13 billion market value.[45] Politicians expressing their support for the company included the Prime Minister Tony Abbott and federal MPs Jamie Briggs,[54] Christopher Pyne, James McGrath, Greg Hunt and Treasurer Joe Hockey.[55] Several senior state ministers also spoke out against the decision to divest in South Australia and Queensland, including South Australian Treasurer Tom Koutsantonis.[38] Former Liberal party leaders John Hewson and Malcolm Fraser both supported ANU's right to choose how and where to invest its money.[55] ANU chancellor Gareth Evans said that the university had not described Santos as a "socially irresponsible" company, and in a letter to Santos CEO David Knox, Evans said the university regretted any embarrassment suffered by Santos over the decision to divest.[56]

References

  1. ^ a b c d "Santos 2018 Full-Year Results". Santos. 21 February 2019. Retrieved 21 February 2019.
  2. ^ a b Santos diverts some gas slated for exports to shore up Australian supply, 7 September 2017, The Age
  3. ^ "Forbes Global 2000". Forbes. Retrieved 31 October 2020.
  4. ^ a b c "Santos". OilVoice. Retrieved 19 April 2008.
  5. ^ a b "Higher interim dividend by Santos as oil and gas revenue rises". Australian News.Net. 21 August 2014. Retrieved 22 August 2014.
  6. ^ Paul, Sonali. "Australia's Santos expands with $2.15 billion Quadrant buy after..." U.K. Retrieved 11 October 2018.
  7. ^ Smith, Angela (28 May 2020). "Santos saves up-front in $1.9b Conoco deal". Australian Financial Review. Retrieved 28 May 2020.
  8. ^ "ConocoPhillips completes Australian asset sale to Santos". World Oil. Retrieved 28 May 2020.
  9. ^ "Santos profit slumps 82pc on oil price drop, CEO to leave". ABC News. 20 August 2015.
  10. ^ News, Murray Griffin of Footprint (30 August 2020). "Australia's big polluters required to offset just 1.2% of greenhouse gas emissions". the Guardian. Retrieved 13 August 2021. {{cite web}}: |last= has generic name (help)
  11. ^ Toscano, Nick (30 November 2020). "Santos targets net-zero emissions by 2040 as climate pressure grows". The Sydney Morning Herald. Retrieved 13 August 2021.
  12. ^ Vorrath, Sophie (16 November 2021). "Gas industry proposes big solar to halve LNG emissions, with support of Sun Cable". RenewEconomy. Archived from the original on 17 November 2021.
  13. ^ "'A carbon dioxide emissions factory': New $4.7b gas field may release more CO2 than LNG, says report". www.abc.net.au. 23 June 2021. Retrieved 13 August 2021.
  14. ^ "IEEFA Update: Santos won't solve the problem of Barossa LNG with carbon capture and storage". Institute for Energy Economics & Financial Analysis. 20 October 2021. Archived from the original on 23 October 2021.
  15. ^ "Lobbyist Information – Bespoke Approach". Register of Third-Party Lobbyists. Electoral Commission New South Wales. Retrieved 29 April 2015.
  16. ^ "Client details: Santos Limited". Register of Lobbyists. Queensland Integrity Commissioner. Retrieved 29 April 2015.
  17. ^ "Who is on the register?". Australian Government Register of Lobbyists. Australian Government – Department of Prime Minister & Cabinet. Retrieved 28 April 2015.
  18. ^ "South Australian Register of Lobbyists - Australian Public Affairs" (PDF). 5 June 2017.
  19. ^ "Lobbyist Portal". www.lobbyists.sa.gov.au. Retrieved 14 June 2021.
  20. ^ "Australian political donations: Who gave how much? – ABC News (Australian Broadcasting Corporation)". ABC News. Retrieved 1 April 2016.
  21. ^ a b c "Santos fined over Moomba explosion". Herald Sun. 22 August 2011. Retrieved 5 February 2015.
  22. ^ a b Bartizan, Paul (21 January 2004). "Explosion threatens gas supplies to two Australian states". World Socialist Website. International Committee of the Fourth International. Retrieved 5 February 2015.
  23. ^ "Sidoarjo Mudflow Erupting at Slower Rate, but No End in Sight, Govt Says" Jakarta Globe 9 May 2011. Retrieved 27 December 2013.
  24. ^ "Mud disaster -Santos no more liable, sells project stake" Industrysearch.com.au 12 December 2008. Retrieved 27 December 2013.
  25. ^ Port Bonython – Menard Bachy Menard Bachy (24 August 2010). Retrieved 27 December 2013.
  26. ^ Further contamination at Santos' Port Bonython facility Environment Protection Authority (18 November 2010). Retrieved 27 December 2013.
  27. ^ "Santos says oil-leak clean-up working" ABC News 9 May 2012. Retrieved 27 December 2013.
  28. ^ NSW EPA [@NSW_EPA] (5 May 2016). ".@NSW_EPA inspect ongoing rehabilitation works at the SANTOS #Narrabri site this week #CSG #pilliga" (Tweet) – via Twitter.
  29. ^ "Santos fine for toxic spill 'pathetic', green groups say". 10 January 2014.
  30. ^ McCarthy, John (20 May 2013). "Santos confirms uncontrolled leak at oil and gas well in Queensland's remote southwest". Courier Mail. Retrieved 25 April 2019.
  31. ^ "Santos coal seam gas project contaminates aquifer". 7 March 2014.
  32. ^ http://www.resourcesandenergy.nsw.gov.au/__data/assets/pdf_file/0009/516492/FactSheet-Piliga.pdf [bare URL PDF]
  33. ^ "More questions on CSG uranium scare". 5 May 2014.
  34. ^ "Extinction Rebellion protesters superglue themselves to road, building in Adelaide".
  35. ^ "Protesters glue themselves to road and let off smoke flares, blocking traffic in Adelaide's CBD". ABC News. 9 March 2021.
  36. ^ "South Korea sued to stop deep-sea gas pipeline". BBC News. 23 March 2022.
  37. ^ Sustainability Report 2013. Adelaide, South Australia: Santos Ltd. 2013. p. 39.
  38. ^ a b c Starick, Paul (22 October 2014). "South Australian Senator Sarah Hanson-Young waging campaign against Santos and fossil fuels". The Advertiser. Retrieved 23 October 2014.
  39. ^ Sustainability Report 2014 (PDF). Adelaide, South Australia: Santos Ltd. 2015. pp. 52–53.
  40. ^ "Santos – We have the energy – Art Gallery of South Australia". santos.com. Retrieved 13 February 2016.
  41. ^ South Australian Government – Department of Environment Our Partners, Botanic Gardens of South Australia. Retrieved 25 November 2013.
  42. ^ "Come Out Festival for Young People" Archived 21 January 2014 at archive.today Santos, South Australia (2009). Retrieved 21 January 2014.
  43. ^ OzAsia Festival website (accessed 2013.11.01)
  44. ^ RiAus.org.au. Retrieved 22 January 2014.
  45. ^ a b "Establishing another champion of exploration and discovery" Archived 2 February 2014 at the Wayback Machine Santos Ltd (2009). Retrieved 22 January 2014.
  46. ^ The University of Adelaide "Australian School of Petroleum | Sponsors". Retrieved 2 November 2013
  47. ^ "Santos backs Queensland Art Gallery for five years" Archived 2 February 2014 at the Wayback Machine Santos (24 November 2009). Retrieved 22 January 2014.
  48. ^ a b c Egan, Geoff (9 January 2015). "Santos sponsorship above board: Minister". Sunshine Coast Daily. Retrieved 9 January 2015.
  49. ^ Small, Stephanie (8 December 2014). "Anti-CSG group Lock the Gate angry Santos logo being used on Qld police cars". ABC. Retrieved 9 January 2015.
  50. ^ Davidson, Helen (28 July 2015). "Artists call on Darwin festival to reject Santos sponsorship over fracking". The Guardian. ISSN 0261-3077. Retrieved 29 January 2016.
  51. ^ "Extinction Rebellion protesters rally against Santos sponsorship". 7NEWS Adelaide. 5 September 2021. Retrieved 1 June 2022.
  52. ^ Haskey, Emelia (31 May 2022). "Extinction Rebellion protests Adelaide Botanic Garden's Santos partnership". CityMag. Retrieved 1 June 2022.
  53. ^ "Will Adelaide Botanic Gardens dump Santos sponsorship?". Radio Adelaide. 23 May 2022. Retrieved 1 June 2022.
  54. ^ Potter, Ben (10 October 2014). "ANU's Santos blacklisting a disgrace and jobs threat, says Abbott minister". Australian Financial Review. Retrieved 23 October 2014.
  55. ^ a b Aston, Heath (13 October 2014). "John Hewson and Malcolm Fraser blast Liberals over ANU divestment backlash". The Sydney Morning Herald. Retrieved 13 October 2014.
  56. ^ Hagemann, Ben (23 October 2014). "ANU backpedals on divestment blacklist". Australian Mining. Retrieved 23 October 2014.

Further reading

  • Weidenbach, K. (2014): Blue flames, black gold: The story of Santos. Santos Pty Ltc. ISBN 9781921037399
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