According to RBC Capital Markets, drilling delays associated with the loss will cost Santos around US$70 million (A$103 million).
In late September the court ruled in favour of Traditional Owner groups represented by the Environmental Defenders Office who argued the gas company had not adequately consulted with them as required under law.
Tiwi Islander Dennis Tipakalippa brought the case. He claimed he was not adequately consulted by Santos before it received drilling approvals for the A$4.7 billion project.
At the time Tipakalippa made his argument, Santos had already begun drilling activities.
Federal Court justice Mordecai Bromberg cancelled the environmental permit issued by the offshore safety and environmental regulator, putting an abrupt halt to development work at the Barossa field which will send gas to the Darwin LNG plant as backfill from 2025.
Santos appealed and the case was sped to the front of the line for a hearing by a full bench of three judges. Justices previously travelled to the Tiwi Islands to hear the complainants on country.
The appeal was heard in mid-November over two days.
The decision was handed down in favour of the EDO in the Federal Court at 12.30pm, eastern standard time today.
The judgment stated: "..we consider that Santos was required by reg 11A(1)(d) to consult Mr Tipakalippa and the Munupi clan because they had interests that may be affected by Santos' proposed activities under the Drilling EP," the judgment read.
"Santos has consulted with Traditional Owners and their representative bodies on the Barossa Gas Project since 2016 and will continue to do so, taking into account the guidance provided by the Court," a statement provided to the ASX said today.
"With a range of cultural heritage and native title agreements across 23 Traditional Owner Groups and six Land Councils around Australia, Santos has a strong track record of working constructively and collaboratively with Traditional Owners.
"We have fought to protect our sea country from the beginning to the end and we will never stop fighting," Tipakalippa said today in a statement sent to media from the EDO.
"Our sea is like our mother - we are part of the sea and the sea is part of us. Santos and every other gas company must take note that this is our country and we must be consulted.
Santos was represented by Allens law firm and legal counsel Christopher Horan, King's Counsel.
The appeal focussed on administrative and public law and how a "relevant person" is defined in the offshore oil and gas legislation.
The field is 140 kilometres from the Tiwi Islands and the project was 46% complete by last month. Santos argued islanders were not relevant persons under the legislation.
The company faced heat from Traditional Owners at its annual general meeting in Adelaide several months ago. Craig Winston said it was "good to put some faces to names of the people threatening my culture and way of life".
"Was it Andrew Tipungwuti alone, or the eight clans?" Winston asked.
Tipungwuti is not the chair of the Tiwi Land Council but is listed as a member. He also plays for Essendon Football Club.
"You say you've engaged but the elders have zero awareness of what's going on. No Santos representative has come and spoken to us," he said then.
He also suggested Zoom meetings were not a productive way for Santos to attempt contact with elders.
It was thought the oil and gas company had a chance given judgement by Justice Bromberg had been overturned by a full bench in the past.
Earlier this year he found in favour of a case, also brought by the EDO, that argued when signing off on a new coal mine former environment minister Sussan Ley had not considered the impact of climate change on children.
On appeal by miner Whitehaven this decision was reversed.
Santos will now have to resubmit a major EP to the National Offshore Petroleum Safety and Environmental Management Authority.
Previously market watchers thought this could add two years to the project, meaning Darwin would only start sending gas at a time when larger amounts of new LNG was coming to market. Gas is earmarked for Japan and South Korea.
SK E&S has a stake in the project and saw its own court cases held in Seoul earlier this year, aimed at preventing funding by the nation's export banks.
Credit Suisse LNG analyst Saul Kavonic wrote today he thought this could cause a material delay to the project and "potentially take several months or longer, as NOPSEMA needs to consider a novel consultation framework and are under heightened scrutiny".
Yesterday Woodside Energy Group CEO Meg O'Neill told her investor briefing day secondary approvals for the Scarborough gas project in Western Australia were seeing delays after the judgement.
"We're working very closely with the regulator to understand what they need from us," she said in response to an analyst question.
"We are certainly concerned. Processes are slowing down, to be really frank. At the same time it's not path critical."
"NOPSEMA has been applying the Federal Court's earlier decision by Justice Bromberg and will be applying the appeal decision from now on," a statement provided to Energy News by the regulator said.
"The litigation is procedural rather than substantive, so we see little risk of project cancellation , but increasing risk of delay," Kavonic said.
He also floated the notion of government intervention.
This is the second bit of bad news for the company this week. On Tuesday it reported a gas leak at one of its Varanus Island platforms that supply the West Australian domestic gas market.
WA Today reported yesterday fertiliser maker Yara Pilbara had to shut operations as a result of lack of gas. The leak will take weeks to fix.
Two weeks ago the Noble Tom Prosser rig drilling Santos Spartan-2 well, designed as backfill for its declining WA fields, was issued a safety notice by NOPSEMA.
At a November investor briefing day CEO Kevin Gallagher confirmed a 10% drop off in production.
On Monday Energy News reported Santos had also handed back a permit where an exploration wells as due next year.