Own Santos shares? Here’s why the company’s international exports could come under pressure

oil and gas worker checks phone on site in front of oil and gas equipment

oil and gas worker checks phone on site in front of oil and gas equipment

Santos Ltd (ASX: STO) shares are up 2.7% in afternoon trade at $7.18 per share.

The S&P/ASX 200 Index (ASX: XJO) energy company is among the minority of stocks in the benchmark index posting solid gains in 2022.

That’s largely thanks to soaring global oil and gas prices, offering the company some heady profits on its domestic sales and international exports.

But Santos shares could come under pressure if its international exports are curtailed.

What are the concerns over the gas trigger?

You’ve probably heard of the gas trigger.

It’s part of the Australian Domestic Gas Security Mechanism. And it enables the government to compel the major liquid natural gas (LNG) exporters to curtail some of their exports from their Queensland plants in favour of selling into the Australian market in case of an energy crisis.

That energy crisis is now upon us, with Victoria facing a gas crunch through the end of September. And as The Australian reports, the Gladstone LNG project – controlled by Santos alongside its partners Petronas, Total and Kogas ­– wants the emergency gas legislation amended.

Gladstone is the only LNG project that’s exporting gas from the domestic market. That means unlike the LNG projects owned by the other two top producers – Origin Energy Ltd (ASX: ORG) and Shell, which are both net contributors to the domestic market – Santos’ project is in net deficit.

In a nutshell that means if the gas trigger is pulled, the onus may fall entirely on Gladstone to sell extra gas into the Aussie market to stave off an energy crisis.

Though Santos has yet to comment, The Australian reported on sources indicating Santos’ Gladstone LNG project wants the net contributor part of the gas trigger abolished, as it doesn’t account for the fact its gas has already been contracted to overseas customers.

The energy security mechanism was slated to end in December this year, but Resources Minister Madeleine King said earlier this month that it will be extended to 2030.

How have Santos shares been performing?

Over the past 12 months, Santos shares have handily outperformed the benchmark, gaining 11% while the ASX 200 has fallen 8%.

The post Own Santos shares? Here’s why the company’s international exports could come under pressure appeared first on The Motley Fool Australia.

Should you invest $1,000 in Santos Ltd right now?

Before you consider Santos Ltd, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Santos Ltd wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of July 7 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/NRAaCyQ

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s