Investor appetite for Australian oil and gas plays returning, says Santos chief Kevin Gallagher

Santos chief Kevin Gallagher says the market has got its appetite back for Australian oil and gas deals while questioning the “fit” of the company’s WA gas assets in its portfolio.

“A year or go ago everybody backed off from looking at buying anything in Australia, every foreign investor backed off, just walked away, because why would you buy something if you don’t think it’s going to get approved?” he said on Thursday.

“You can see that appetite is back in the market again, so the confidence that we can get back and build these projects and deliver on these projects is building again externally and particularly overseas.”

Santos recently celebrated a win in a landmark Federal Court case against Tiwi Island Traditional Owners who had claimed the oil and gas company’s proposed 262km pipeline would “damage sea country, dreaming tracks, songlines and areas of cultural significance”.

“I think ultimately the case that we were successful in January has created some new strong case law, which is giving everybody a lot more confidence,” Mr Gallagher told the Macquarie Australia Conference in Sydney.

“But from our point of view we’d like to see that regulatory change being accelerated at least to give that further certainty going forward.”

In January Federal Resources Minister Madeleine King promised “clear and unambiguous” new consultation rules for offshore gas developments.

And in another win for oil and gas developers, Ms King on Thursday backed in gas until 2050 and beyond under a new Future Gas Strategy.

Mr Gallagher also confirmed that the company was looking to sell half of the WA Dorado project, after saying back in February that he needed a line of sight on the completion of Barossa and certainty on the approvals process before it could be developed.

“About a year or so ago it just ground to a halt because of all the regulatory issues that were going on and the approvals issues that were going on, and we lost a good opportunity there,” he said. “I want to sell down at least 50 per cent.”

But more broadly he questioned the “fit” of Santos’ domestic gas business in WA.

“As Pikka and Barossa come online, the rest of our Australian and PNG business is essentially an LNG business, we’ve got an oil business in Alaska, and then WA becomes a domestic gas business, and the question you would ask there is, does that fit? Because you want some domestic gas to give you your social licence to export your LNG,” he said.

“I think the question is can Western Australia become an LNG business going forward? What is the LNG opportunity over there for us? . . . Otherwise you’d have to question long term whether that’s a core part of our strategy or not.”

In February Santos and Woodside walked away from talks that could have seen the creation of a new oil and gas giant.