Santos Faces Fresh Legal Setback Over $2.4 Billion Narrabri Gas Project

(Reuters) — An Australian indigenous group on Thursday won a legal challenge on appeal against Santos' A$3.6 billion ($2.37 billion) gas extraction project near the town of Narrabri, raising the risk of delay to what could be a major growth driver.

The Federal Court of Australia ruled in favor of the Gomeroi People in an appeal against a 2022 decision by a Native Title Tribunal, which approved the project and concluded its benefits outweighed concerns it would damage the traditional owner's culture, land and waters and worsen climate change.

Santos on Thursday said the appeals court ruled the tribunal had erred by not weighing evidence about climate impact.

"The parties should be given an opportunity to consider the Court's reasons and attempt to agree on appropriate orders in light of the Court's reasons," the court decision read.

"Failing agreement, the parties should be permitted to make submissions on appropriate orders."

The decision returns the project to the uncertainty of a legal dispute months after Santos won a court battle allowing it to resume pipeline construction at its $4.3 billion Barossa gas project.

Santos said last month it aimed for the project in Narrabri in New South Wales to be ready for a final investment decision (FID) by 2025 subject to the Native Title decision.

A Santos spokesperson did not respond to Reuters' questions about whether the appeal decision would impact the FID date.

Santos said it would continue to work through land access, native title, pipeline licensing and remaining environmental approvals processes to get the Narrabri project ready for a final investment decision.

Shareholders have been pushing for radical action at Santos, including hiving off lucrative LNG assets, to revive an anemic share price that missed out on much of the 2022 boom in energy stocks.

Santos shares were up 1.3% to A$7.28 at 3.20 p.m. (0420 GMT).

($1 = 1.5214 Australian dollars)

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