South Korea delays Santos gas loan after indigenous group sues
A South Korean state-owned bank has delayed approval of a loan to Australian gas company Santos to develop its Barossa offshore gas project after Indigenous Australians argued the project would harm the local environment.
The delay and ongoing lawsuit have cast doubt on the future of the project as environmentalists around the world step up their campaigns against fossil fuel development.
Last month, Tiwi islanders sought an injunction in Korean courts that would prevent two Korean government export credit agencies, the Export-Import Bank of Korea (Kexim) and Korea Trade Insurance Corp. (K-Sure), to lend up to $700 million. to finance the Barossa project.
They claimed Santos failed to consult them on the construction of a 300km pipeline across the Tiwi Sea in northern Australia, leading from the offshore Barossa gas field to a liquefied natural gas processing plant in Darwin.
At a meeting on March 31, a week after the lawsuit was filed, Kexim’s board decided to delay its decision on a credit facility for the Barossa project worth $330 million. dollars, citing environmental and legal factors.
“The decision has been delayed as we consider many factors including the need for the project, environmental and legal risks and ways to reduce carbon emissions,” Kexim told the Financial Times. “We don’t know when the decision will be made.”
K-Sure, which did not approve its loan to Santos, said it would “only support projects that meet international environmental standards”.
The court case, which has not yet started, follows mining group Rio Tinto’s disastrous decision in 2020 to blow up a 46,000-year-old Aboriginal heritage site at Juukan Gorge in Western Australia. This led to the resignation of general manager Jean-Sébastien Jacques and drew investors’ attention to the issue of indigenous heritage.
The traditional owners of Tiwi claimed that Santos only sent two emails and made “one unanswered phone call” during the consultation period on the project. They also alleged that Santos and former owner ConocoPhillips misled them about the prospect of it continuing.
“The people of Santos never came to the Tiwi Islands to talk to us face to face. They didn’t tell us about any risk,” Francisco Babui, Tiwi traditional owner and plaintiff in the case, said in a statement. “By taking the South Korean government to court to stop this gas project, we are protecting our family and our land.”
He said the pipeline would disrupt the local ecosystem, especially turtle habitats, which are culturally important to the Tiwi people.
Santos said in a statement that he had followed all consultation processes required by law.
ConocoPhillips said the company had consulted with affected stakeholders and had “fully complied with regulatory obligations”.
Representative Jang Hye-young, a lawmaker from Korea’s Progressive Justice Party who supports the injunction, said Kexim “should withdraw its support for the project, not just withhold its decision, given its negative impact on the climate change and its lack of commercial feasibility”. .
The $3.6 billion Barossa project has been underway since 2004, but Santos only made a final investment decision in March last year. Korean energy company SK E&S has a 37.5% stake in the project, and much of the liquefied natural gas produced by the project will be shipped to South Korea.
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