Santos Ltd (ASX: STO) shares have received some healthy tailwinds over the past year amid the sharpening global energy crisis.
Energy supplies were already tight heading into 2022 as nations re-opened from their pandemic shutdowns, following years of underinvestment in exploration and development of new energy projects.
Russia's invasion of Ukraine exacerbated the budding crisis, underlined by this week's likely sabotage of the Nord Stream gas pipeline.
As European nations scrambled to secure alternative energy sources, Santos shares marched 11% higher since the closing bell on 31 December. That's atop paying out 22.7 cents in partially franked dividends this calendar year.
Santos shareholders were hoping the company's $4.7 billion Barossa gas project would help Santos cash in on the strong global gas demand for years to come.
But those plans are now in jeopardy.
Image source: Getty Images
Legal setback post FID
Santos, along with its Japanese and Korean joint venture partners, made its final investment decision (FID) for Barossa, located in the Timor Sea north of Darwin, in March 2021.
And the project was greenlighted by the National Offshore Petroleum and Safety Environmental Management Authority (NOPSEMA).
But a federal court threw cold water on that call yesterday, ruling in favour of Tiwi Islands' traditional owners, who claim they had not been properly consulted before the project won approval.
As ABC News reported, the Environment Defenders Office said the NOPSEMA approval was unlawful, adding that traditional owners are concerned about environmental impacts and potential damage to culturally significant sites.
Santos halted work on the project when the court challenge was filed. That pause will now continue. Santos is appealing the decision.
Commenting on the court's ruling, Santos stated:
As a result of the decision, the drilling activities will be suspended pending a favourable appeal outcome or the approval of a fresh Environment Plan. Given the significance of this decision to us, our international joint venture partners and customers, and the industry more broadly, we consider that it should be reviewed by the Full Federal Court on appeal.
Investors don't appear overly concerned with the legal setback at this stage, with Santos shares up 3.06% in Thursday morning trade.
How have Santos shares been tracking longer-term?
Though still down from their pre-pandemic levels, Santos shares have notched a 75% gain (exclusive of dividends) over the past five years. That far outpaces the 16% gains posted by the S&P/ASX 200 Index (ASX: XJO) over that same period.
