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$4.7B offshore gas project postponed due to coronavirus

Santos workers
Santos workers

One of the nation’s largest energy producers will delay its $4.7 billion gas development in the Northern Territory due to COVID-19.

Santos has confirmed the coronavirus (covid-19) will postpone a financial investment decision (FID) on the Barossa Gas Project, 300km off the shore of Darwin.

Outbreak and oil prices blamed

“Given the uncertain economic impact of covid-19 combined with the lower oil price, we expect to defer FID on Barossa until business conditions improve,” Santos managing director Kevin Gallagher said in a public statement.

“Barossa remains an important project for Santos due to its brownfield nature and its low cost of supply.”

The remarks came days after the Central Land Council and both federal and NT levels of government declared a special control area, patrolled by the NT Police or Australian Army to help contain covid-19.

$600M cutbacks

The proponent also announced a $550 million drop in annual capital expenditure and $50 million reduction in cash production costs. Santos explained its actions were in response to the viral outbreak and lower oil price. The date when hundreds of new jobs will be created remains uncertain.

“Whilst the current oil price dynamic is challenging, the eventual recovery will create opportunities for companies positioned to act on them,” Gallagher said.

“We have [also] implemented a series of measures to protect the health and safety of our people, including restricting travel and meetings, implementing social distancing measures across all of our sites and making changes to field and office access arrangements.”

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