APA’s partnership with Santos faces shareholder criticism

27 October 2017

At the annual general meeting of APA held today in Sydney, company executives faced several questions from shareholders regarding their Western Slopes Pipeline project in Northern NSW. The $450 million pipeline project is a partnership with Santos to connect coal seam gas (CSG) from their Narrabri gas project to the East Coast market. Shareholders raised their concerns over the uncertainty of gas reserves in Narrabri and also the feasibility of running pipelines through key agricultural lands where local farmers have expressed strong opposition.

The pipeline will also run through rivers and wetlands, raising grave concerns over its environmental impacts. Shareholders asked the board why they are fast-tracking the roll out of pipelines that are associated with the highly unpopular Narrabri Gas Project, which has received 22,000 submissions voicing community opposition.

The opposition is clearly justified: Santos plans to drill 850 coal seam gas wells through the Pilliga forest, the largest inland forest left in Eastern Australia. Farmers have also raised concerns about water contamination and disturbance of agricultural land due to soil damage. Despite this, APA Chairman Len Bleasel stressed that  the project posed low risk and commented, “If the gas is not there or proven to be there, that’s a Santos issue, not ours. We would have a guarantee for Santos to pay the cost of our pipeline.”

Murky on environmental disclosures

Although the company expressed support for the Paris Agreement and has previously promised to follow the climate risk disclosure framework released by the Task Force on Climate-related Financial Disclosure (TCFD) “wherever practicable”, their actions do not match their words. The TCFD recommendations weren’t mentioned anywhere in APA’s 2017 Sustainability Report and “Climate Risk” is not listed as a key business risk. What is hidden under the guise of APA’s promises of a sustainable energy future is a massive increase in emissions from 350,922 tonnes equivalent of carbon dioxide FY 2015 to 1,084,236 tonnes of carbon dioxide in FY 2016.  This is an increase of 209%. Energy efficiency is not improving either, as the year-on-year Energy consumption (GJ) has increased by 321.1%. 

In contrast, APA’s Sustainability Reports for FY2016 and FY2017 claim that the company scored highest amongst its direct peers in the Carbon Disclosure Project’s (CDP) carbon emissions reports. CDP’s Australian Climate Leadership Report 2016 grades ASX listed companies between scores of A to E, with A being the best and E being the worst performance according to their improvements on carbon emissions in response to climate change. APA has scored a “B”. When a shareholder asked how is it that APA claims the best position while clearly other Australian utility providers like AGL and Infigen Energy have scored a higher grade, CEO Mick McCormack responded with an unclear answer:

Over the last 6 years APA has not responded to requests by CDP  to reveal data about their efforts to manage and govern freshwater resources. APA scored “F” on the CDP 2016 Annual Report of Corporate Water Disclosure for their lack of response. McCormack had no immediate response to this lack of diligence, taking shareholder’s query on notice.