Santos takes a hit as global oil and gas prices fall

Santos, one of the largest Australian oil and gas companies, has reported a 13 per cent fall in first-quarter sales revenue amid a slowdown in production and softening of fossil fuel prices from last year’s record highs driven by a historic global energy crisis.

Adelaide-based Santos on Thursday said it had earned sales revenue of $US1.6 billion ($2.4 billion) for the three months to March 31 while production volumes slipped to 22.2 million barrels of oil equivalent.

The production result was slightly lower than most analysts’ expectations, but revenue was in line with forecasts.

Santos managing director Kevin Gallagher said the company had continued to perform strongly in the face of mounting “regulatory and economic uncertainty”. Santos and other east-coast gas producers are under mounting pressure from a range of government measures to tame soaring energy costs, including regulations capping domestic gas sales at $12 a gigajoule for 12 months, and reforms that give the government the more regular ability to divert exports to the domestic market to head off potential shortages.

Earlier this week, the Albanese government said it was weighing whether to raise taxes on the gas sector’s soaring profits through reforms to the $2 billion-a-year Petroleum Resources Rent Tax (PRRT).

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“The disciplined operating model we have in place positions us to deliver on our strategy,” Gallagher said.

The nation’s $91 billion LNG industry has enjoyed record profits over the past year as Russia’s invasion of Ukraine roiled global energy markets, intensified competition for spare cargoes of oil and natural gas, and ignited prices.

Prices of liquefied natural gas (LNG) shipped from Western Australia and Queensland reached unseen highs in the past two years, but are now declining due to healthy stockpiles and milder weather in the northern hemisphere, which has reduced the need for households to turn up their heaters.