Australia's second-largest oil and gas firm Santos said on Thursday the Middle East conflict has upended energy markets with impacts likely to persist for years, but emphasised its liquefied natural gas shipping routes were not affected by the Iran war.
The comments come as the Middle East remains on edge despite diplomatic efforts and sporadic peace talks, with fighting and heightened risks around the Strait of Hormuz - a critical artery for global oil and gas supplies - keeping markets volatile.
"Recent disruptions in the Strait of Hormuz and attacks on global energy infrastructure have only highlighted the strategic advantage of Australian LNG for our Asia-Pacific partners," Santos Chair Keith Spence said at the company's annual general meeting.
Santos shares fell one per cent on Thursday, as the benchmark index was down 0.3 per cent. The company's shares are 24 per cent higher so far this year.
Nearly 23 per cent of investors voted against Santos' remuneration report. Major Australian pension fund HESTA, which has AU$100 billion ($71.79 billion) of funds under management, said it voted against the report and a AU$4.7 million bonus paid last year to CEO Kevin Gallagher.
"In our view, remuneration outcomes for CEO Kevin Gallagher are not adequately justified given underlying company performance and the breakdown of a third acquisition proposal in seven years, both of which have weighed on shareholder value," HESTA CEO Debby Blakey said in a statement.
HESTA held about AU$114 million worth of Santos shares as at end-December, according to its filings and the most recent publicly available figures.
Santos told investors the first oil from its Pikka project in Alaska is "imminent" after previously flagging that output was expected to begin in the coming weeks.
Santos' long-delayed oil project Dorado off the coast of Western Australia has gone back, “to the top of our thinking," Gallagher said.
Santos acquired its 80 per cent stake in the 70,000 to 100,000 barrels of oil per day project via its purchase of Quadrant Energy in 2018. Dorado was the largest oil discovery in Australia in decades but remained undeveloped as it competed for capital with Santos' Barossa gas project and Pikka.
The company recently added a seven-well exploration campaign to the Dorado project and Gallagher said the company would drill two to three wells this and next year. This will add years to the project’s development, should Santos decide to sanction it.
Santos said 83 per cent of its LNG portfolio was contracted over the next five years, giving it some exposure to spot markets, where prices have doubled since the beginning of the Iran war.
Spence said he plans to retire at the conclusion of the 2027 annual general meeting and the appointment of a future CEO would be a matter for his successor.
(Reporting by Scott Murdoch in Sydney and Helen Clark in Perth, additional reporting Roushni Nair in Bengaluru; Editing by Subhranshu Sahu and Jamie Freed)
