Investor demands for Santos to wind down oil and gas production increase to 15%

3 May 2022

15% of Santos’ shareholders today defied the company’s board, demanding Santos drop its rampant oil and gas expansion plans and instead manage down production in line with a net zero emissions by 2050 pathway. This is an increase on the 13% support received for a similar resolution last year.

At the same meeting, 37% of shareholders voted against the company’s own climate change plan, the highest vote recorded against any ‘say on climate’ resolution in world to date.

Speaking after today’s Santos annual general meeting, Market Forces’ Asset Management Campaigner Will van de Pol said:

“These votes are an embarrassment for Santos. With 37% of shareholders rejecting the company’s climate plan, and 15% going so far as to demand Santos wind down oil and gas production, the company clearly needs to change its climate-wrecking business plans.”

“Santos claims to support the climate goals of the Paris Agreement. But its plans to spend billions on increasing oil and gas production completely undermine this claim, and will actually see the company’s overall emissions increase over the next decade.”

“Despite these votes, it’s clear many investors have still swallowed Santos’ disingenuous claims of climate action, which amounts to nothing more than business as usual plans to increase oil and gas production.

“Santos’ own analysis shows the value of its oil and gas portfolio would drop by around half under the International Energy Agency’s Net Zero by 2050 scenario, but apparently most of its investors think exacerbating this risk is an acceptable approach for the company to take.”

“No investor can legitimately claim to support the Paris Agreement and net zero emissions by 2050, while supporting Santos’ plans to completely undermine those goals. These investors, which include many of Australia’s big super funds, must be called out for their greenwash.”

Learn more about Santos’ climate-wrecking business plans, find out if your bank or super funds invests in the company, and take action today!

Betting against climate action

Since Santos’ 2021 AGM, the company has only moved further out of alignment with global climate goals by pursuing oil and gas expansion plans that threaten to waste billions in investor capital on projects that would be stranded by the low-carbon transition that’s already underway. Meanwhile the climate science telling us of the urgent need to manage down oil and gas production has only become clearer.

As shown in the charts below: 

  • Santos plans to spend up to ~AUD$17 billion on oil and gas growth projects, equating to 63% of the company’s current market capitalisation
  • Even adopting conservative estimates, Santos’ increasing production plans are likely to see the company’s overall annual emissions sit more than 20% above a combined Santos and Oil Search 2020 baseline through 2026-2029, before falling back to ~7% above 2020 levels in 2030 (assuming the company’s P’nyang LNG project does not commence by then)
  • Santos’ analysis shows its oil and gas portfolio would halve in value under the IEA’s net zero by 2050 scenario
Source: Market Forces analysis of Grant Samuel Independent Expert’s Report, contained in Santos and Oil Search merger Scheme Booklet (see especially from page 186); DISER 2021 Resources and Energy Major Projects List; Santos May 2021 investor update
Source: Market Forces analysis of Grant Samuel Independent Expert’s Report, contained in Santos and Oil Search merger Scheme Booklet; 2022 Climate Change Report
Net zero means “no new oil and gas,” but Santos disagrees

The International Energy Agency (IEA) concludes there can be “no new oil and gas fields approved for development” from 2021, under its Net Zero Emissions by 2050 (NZE) scenario. However, when questioned on the company’s plans to pursue new oil and gas developments in spite of the IEA’s conclusion, Chair Keith Spence and CEO Kevin Gallagher tried to suggest Santos’ expansion plans don’t fall into this category. Instead, Santos made the outrageous claim that all of its exploration and development plans are consistent with the IEA’s NZE scenario.

With plans to increase oil and gas production by at least 17% by 2030, compared the 14% fall in global production in the IEA scenario, and plans to develop new oil and gas fields, Santos’ claim is indefensible.

Santos Chair & CEO make the outrageous claim that the company’s exploration and development plans are consistent with the IEA’s net zero by 2050 scenario.
Santos showing no signs of slowing down on Narrabri and Barossa, despite significant Traditional Owner opposition

Questions kicked off at the meeting with Dorothy Tighe—a Gomeroi woman—serving CEO Kevin Gallagher and the rest of the Santos board members with a cease and desist notice, telling the company they don’t have the Gomeroi community’s consent to proceed with the Narrabri Gas project and they are trespassing on their Country.

This was followed closely by Craig Winston—a Tiwi Islands man—confronting the board over the fact that it doesn’t have his community’s consent to proceed with Barossa, and that Santos is going ahead with this project without having consulted with locals. Several other groups, including Alawa Traditional Owners and farmers from the Narrabri community, were also represented at the meeting and raised similar concerns. Despite such strong opposition from the communities where Santos operates (and plans to expand), the company is recklessly pushing ahead with its climate-wrecking, cultural heritage-trashing business plans.

Gomeroi woman Dorothy Tighe serves the Santos board with a cease and desist notice on behalf of her community
Tiwi Islands man Craig Winston confronts the board over its lack of community consultation