Santos under fire from Market Forces

August 18, 2022

Market Forces say the time has come for investors to publicly withdraw capital from Santos over its “climate failure”

Santos, Australia’s second-biggest oil and gas producer, has come under fire from activist shareholder group Market Forces, which says the company’s new net-zero project is incompatible with climate change targets.

The Pikka Phase 1 project in the North Slope Borough of Alaska will produce 80,000 barrels a day of oil, with first oil anticipated in 2026.

Santos’ managing director and chief executive Kevin Gallagher said Pikka Phase 1 is the “right project at the right time in the right location”.

Gallagher noted that “low-carbon oil projects like Pikka Phase 1” respond to new demand for OECD supply and are “critical for global and US energy security”.

However, Market Forces rejects this.

The group said: “Santos claims Pikka is ‘a net-zero project’, but that claim actually excludes the vast majority of the emissions related to the project.”

According to the group, Santos’ net-zero claim only refers to the emissions associated with the production process (Scope 1 and 2), not the amount of emissions generated when the oil is burned (Scope 3).

Pikka is expected to produce almost 400 million barrels of oil in total, which Market Forces estimates would release 224 million tonnes of carbon dioxide equivalent (MtCO2-e) when Scope 3 emissions are included.

Market Forces also recently reported Santos to corporate regulator Australian Securities and Investments Commission for potentially misleading statements made at its annual general meeting (AGM).

The group’s concerns about Santos’ AGM statements are in addition to allegations currently being prosecuted in the Federal Court that the company misled the market about its net-zero pathway.

“Investors, including our super funds, must recognise their years of engagement with Santos has failed to bring the company into line with global climate goals, as shown by today’s Pikka announcement. The time has well and truly come for investors to publicly withdraw capital from the company over its climate failure,” Market Forces concluded.