Leaked letter reveals regulator's 'concerns' about gas giant Santos

Australia's offshore oil and gas regulator says it holds "concerns" about fuel use and gas burn-off at Santos's multi-billion-dollar Barossa project, citing "continued non-compliance".

In a letter to Santos seen by the ABC, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) said it had issued the company with a warning following an inspection of its onshore gas storage facility on Darwin Harbour in March.

The letter says inspectors observed key aspects of Santos's environment plan were not being implemented in relation to fuel management and flaring — which releases CO2 into the atmosphere — and warned Santos there needed to be a greater focus on compliance.

But following a subsequent inspection of the offshore Barossa facility, about 300 kilometres north of Darwin in the Timor Sea, inspectors said the issues had not been addressed.

"This exhibition of continued non-compliance, several months after the issues were initially raised, is of concern to NOPSEMA," the letter reads.

Inspectors also noted issues with "ineffective" management of "environmentally relevant equipment" may represent a "broader systemic issue".

"The warning followed inspection findings that Santos was not adequately setting, monitoring and managing fuel and flare performance in line with its environment plan commitments," a NOPSEMA spokesperson told the ABC on Monday.

"Both fuel use and flaring were above the estimates outlined in the plan for the hook-up and commissioning phase."

In a statement, a Santos spokesperson said the company "has not faced any enforcement action from NOPSEMA in respect of the Barossa Project nor has it received any notice of non-compliance in relation to any fuel and flare obligations, including reporting requirements, in the environment plan".

The spokesperson said Santos was committed to minimising environmental impacts. 

The Barossa, one of Australia's biggest gas projects, has faced a number of setbacks in getting up and running, including initial delays in gas shipments from Darwin to Asia.

Gas from the offshore facility is sent to Santos's Darwin LNG facility on Darwin Harbour, which made national headlines last year when the ABC revealed it had been leaking methane for years.

While the leak has yet to be fixed, Santos says the facility poses no safety risk.

Greenpeace Australia Pacific's head of climate and energy, Joe Rafalowicz, accused Santos of "dodging responsibility for its pollution".

"Rather than disclosing this information and creating a new environment plan, Santos has continued business as usual and ignored repeated warnings from the offshore regulator," he said.

"Just like its leaking gas tank in Darwin harbour, Santos is again leaving the NT community and environment to pay the price."

The Institute for Energy Economics and Financial Analysis's Kevin Morrison said Santos's continued non-compliance with flaring and fuel use requirements suggested the company may be dealing with unanticipated operational issues at the Barossa.

"It also means the project's emissions and pollution is higher than forecast," he said.

"Darwin residents are feeling the full impact of this flaring and the community there have a right to be very concerned [about] why Santos has not addressed the issues NOPSEMA has raised.

"Barossa is already emissions intensive as it has the highest CO2 concentration in any gas field developed for LNG exports."

In its letter to Santos, NOPSEMA said it expected the company to provide details of the steps taken to fix the issues, as well as undertake a review of its environment plan and develop a way to track performance — and that another inspection was planned for the third quarter of 2026.

NOPSEMA did not respond to questions from the ABC about whether that inspection had taken place or whether Santos had resolved the issues raised.

John Robert — a chemical engineer and industrial economist with more than 40 years' experience in the oil and gas industry — said penalties should have been imposed.

"It's outrageous that a warning by a federal authority can be ignored by an ASX-listed company without any consequences," he said.

A Santos spokesperson told the ABC the process outlined in its Barossa Environment Plan (EP), accepted by NOPSEMA, "allows Santos to review EP estimates during the lifecycle of the Barossa Production Operations EP".

"Santos has engaged with NOPSEMA to agree to a forward plan and set actions in line with the outcomes of the onshore and offshore inspections," they said.

NOPSEMA did not respond to questions about whether it would take further action against Santos.