Dorado Project Re-Emerges Amid Global Energy Security Concerns

Santos' previously shelved US$2 billion Dorado oil and gas field development offshore Australia has returned to the forefront of the company's strategic planning, driven by the global energy security crisis exacerbated by the Middle East conflict. Santos CEO Kevin Gallagher highlighted that the conflict has exposed the fragility of global energy security and created unprecedented competition for reliable energy supply. This context is particularly significant given that Australia's domestic oil production meets only 5.6% of its demand, and domestic refining satisfies just 17% of local needs, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

Santos' Plans for Dorado and the Bedout Basin

Gallagher informed shareholders that Dorado has returned to the top of Santos' thinking, along with the broader Bedout basin, which the company believes contains substantial additional liquids and gas. Santos plans to drill two to three wells in the basin by the end of 2025 or early 2026 to further appraise the area. Gallagher stated that Santos stands ready to accelerate Dorado's development if regulatory and government support is provided. When the project was suspended in January 2025, Santos had already targeted the Nganhurra floating production, storage, and offloading (FPSO) vessel for an initial development phase to exploit Dorado's liquids, with conversion expected to be performed by Seatrium in Singapore. However, the Nganhurra was subsequently acquired by BW Offshore and is now marketed as the BW Hurra. Upstream market sources indicate no fresh inquiries on project design and engineering, with clarity unlikely until after the appraisal drilling programme.

Project Details and Resource Estimates

The Dorado oil and gas field is located in permit WA-64-L, approximately 150 kilometres offshore Western Australia, in water depths of around 90 metres. Co-venturer Carnarvon Energy estimates that the discovered gross best estimate contingent resources within Dorado and surrounding fields total 249 million barrels of light oil and condensate, along with 1.1 trillion cubic feet of gas. Santos now has the capacity to undertake a project of Dorado's scale, as its Barossa field offshore Australia nears the end of its commissioning challenges, and the first phase of its Pikka oil project in Alaska is approaching start-up.

Cautious Stance on Timing and Barossa Challenges

Despite the renewed focus, Santos chairman Keith Spence adopted a more measured stance on Dorado's likely timing, noting that while it would be the first project off the rank if it offers the greatest benefits, significant work remains. Meanwhile, Santos has yet to restart production at its Barossa gas field and the Darwin LNG project following commissioning issues with Barossa's BW Opal FPSO. The Barossa FPSO is expected to begin ramping up production over the next week as flushing and cleaning of heat exchanger trains are completed. During the recent shutdown, dry gas compressor seals were replaced to enable full production rates once the FPSO resumes operations, with LNG production anticipated a few days after the FPSO is back online. Gallagher acknowledged the challenges during Barossa's commissioning but expressed satisfaction with the replacement of dry gas seals and the expected ramp-up. Santos' first quarter 2026 production reached 22.5 million barrels of oil equivalent, a 3% year-over-year increase, as Barossa achieved its first LNG cargoes before production was shut in late March. Sales revenues rose 3% compared to the prior three months, totaling approximately US$1.27 billion.