South Korean financier suspends loan for multi-billion dollar Barossa gas project

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Environmentalists and traditional owners in the Northern Territory have claimed victory in their bid to derail one of the biggest recent projects in the country’s oil and gas sector.

Traditional owners of Larrakia and Tiwi Islander, along with an international coalition of anti-gas groups, are targeting plans for a $4.7 billion Barossa gas development, to be built and operated by Santos, in the waters about 300 kilometers north of Darwin.

In a lawsuit filed in a South Korean court last month, the traditional owners sought to stop two of that country’s export credit agencies from financing the offshore gas field with nearly $1 billion in loans.

Some elders say they are not in favor of a pipeline, which is proposed to cross a habitat protection area, as part of the project.

One of the agencies involved in the lawsuit, the government-backed Export-Import Bank of Korea or KEXIM, has now delayed its decision whether or not to invest in Santos’ South Korean partner, the company energy SK E&S.

The project is opposed by traditional owners of the Tiwi Islands, north of Darwin, and environmental groups.(Provided: Rebecca Parker)

“Projects like Barossa often need this kind of public money to get private financiers to come in and support the project,” said Dina Rui of Jubilee Australia, one of three groups campaigning against the project.

“Without this kind of public money from South Korea, it could very well mean that Barossa’s future is on shaky ground.

Loan approval “directly linked” to the future of the project

The amount of the loan KEXIM is considering, as well as the reasons why a decision has been delayed, are not known.

But environmental groups suspect the pause is linked to environmental concerns they have raised with South Korean stakeholders.

South Korean campaign group Solutions for our Climate said it was “very rare” for a project to be reviewed by a KEXIM committee and not be approved.

“Given that KEXIM’s Credit Expansion Committee includes the bank’s chairman and is conservative in its decision-making, the delay in investment indicates that KEXIM views this project as highly risky – although ‘they’re not being candid about this concern with the public,’ climate finance researcher Dongjae Oh wrote in response to questions via email.

Barossa’s development plans include the construction of a floating production facility, subsea production wells and a gas pipeline linking the Timor Sea to an LNG processing facility at the Port of Darwin.

The Darwin de Santos LNG plant is seen from above at dusk.
Santos says the project will create up to 350 permanent jobs, including at the Port of Darwin’s LNG processing facilities.(Supplied: Santos Limited)

The project has been linked to Australia’s gas recovery post COVID-19 and is expected to provide around 350 ongoing jobs once production begins in 2025.

Mr Oh said two other investors had already approved their funding for the project, so KEXIM’s decision was “directly linked to the future of the Barossa project”.

“Currently, K-SURE of South Korea and JBIC of Japan have approved their funding, so project funding depends on KEXIM,” he wrote.

Tibby Quall, a Larrakia elder from Darwin, said his family was never consulted on the project.

“It’s a huge development and I have a lot of concerns for the port and the pristine areas of our country,” he said.

“We only have a small port, but we want everything to remain intact for everyone.”

Tibby Quall looks seriously at the camera.  Behind him is the ocean.
Dangalaba Larrakia elder Tibby Quall fears the project will damage the port.(ABC News: Michael Franchi)

Other approvals required, depending on the regulator

Santos declined to comment while the case was in court.

The resource giant is the lead company and has a 50% stake in the Barossa project, which made a final investment decision last year but is not involved in the legal action.

Contacted after lawyers acting on behalf of traditional owners sought an injunction in March, the company said it had “all necessary approvals in place”.

But the gas industry regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), said further approvals were needed before the project could go into production.

The company previously said it consulted with stakeholders.

“As is the case with all our projects, we are undertaking consultations with all key stakeholders where they are provided with detailed information about the project,” a spokesperson previously told the ABC.

Santos has previously said he plans to explore options for carbon-neutral LNG production through processes such as carbon capture and storage and carbon credits.

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