OPINION

Barossa delay could tarnish Gallagher's golden handcuffs

LAST year rumours swirled that Santos chief Kevin Gallagher could replace outgoing Woodside CEO Peter Coleman. 

 Barossa delay could tarnish Gallagher's golden handcuffs

 
The board was so startled by the notion that the man who pulled their company from red to black, doubled the share price, brought back dividends, and made two major acquisitions of synergistic assets could leave for the competition that it offered him a A$6 million bonus.
 
That was in addition to his ordinary cash salary, and existing short and long term incentives.
 
The bonus is dependent on the Scotsman sticking it out to the end of 2025 and delivering on both carbon emissions reduction targets and growth projects, including the Moomba carbon capture and storage development, the offshore Dorado oil project, whose sanction has been delayed twice, and the Barossa gas field.
 
Gallagher was to deliver on growth projects and emissions reduction, with payment on performance of these split 60-40, respectively.
       
The bonus is equal to 850,000 shares to the value of $6 million, and will be reviewed each year, and require him to he employed at December 31, 2025.
 
The specific milestones to be achieved, the actual underlying performance conditions were not released to market owing to commercial sensitivity, Santos said.
 
"Kevin is critical to the successful delivery of the company's strategy, major growth projects and driving the energy transition over the next five years," chair Keith Spence said at the time, defending the decision which raised the eyes of some shareholders.
 
Barossa drilling was halted in September after the Federal Court found Santos had not properly consulted with Traditional Owners on the Tiwi Islands.
 
Santos appealed and the case was heard last month.
 
Today the court upheld the prior judgement.
 
The company will have to reapply for one of its major approvals.
 
Despite the court loss, in a brief statement to the market today, Santos maintained its first gas remained on target for 2025, and it does not expect cost of schedule overruns.
 
Credit Suisse analyst Saul Kavonic suggested it could add months to the project, while others have speculated years given the National Offshore Petroleum Safety and Environmental Authority has now slowed the approvals process it could be significant.
 
A statement from the petroleum lobby body APPEA said that "there is now the risk of more delays and obstacles in the progression of important energy projects, postponing new supply that is needed to deliver energy security, emissions reductions and substantial economic returns for Australians".
 
"This is not an issue that affects one company. It affects 35 environment plans for activities in the offshore oil and gas industry," APPEA complained.
 
"Some companies have vessels and equipment on stand-by at a cost of millions of dollars a day."
 
 
 
 
 

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