(Bloomberg) -- Indigenous groups from islands in northern Australia are taking South Korea's state financiers to court in an attempt to halt funding for what has been described as one of the world's dirtiest natural gas projects.
The residents of the Tiwi Islands filed an injunction to the district court in South Korea against the Export-Import Bank of Korea and Korea Trade Insurance Corp. to block their financing of as much as $700 million to the $3.6 billion Barossa project, according to a joint statement from activist groups. The islanders argue that they weren't given “free, prior and informed consent” for a 260-kilometer (160-mile) pipeline that will run through the Oceanic Shoals Marine Park and a section of sea country.
Santos Ltd., the operator of Barossa, said the project had all the necessary approvals in place and that it has consulted with all key stakeholders. Closely held Korean company SK E&S Co., which owns 37.5% of the project, declined to comment. Korea Trade Insurance only supports projects that are in line with international environmental standards, a spokesman said. The Export-Import Bank of Korea is considering various factors, including the need to import LNG and ways to reduce carbon emissions, when it comes down to financing the Barossa project, according to a company spokesman.
The injunction is the latest legal challenge to the fossil fuel sector as environmentalists increasingly use courts to pressure companies to stop embracing carbon-emitting energy sources. In the past year, Royal Dutch Shell Plc has been ordered to cut emissions faster than planned, while Santos has been criticized by an activist group over its net-zero strategy.
“Public finance is often the keystone of getting risky projects like Barossa over the line,” Dina Hopstad Rui, a researcher at Jubilee Australia Research Centre, said in the statement. “Without it, many would just fall over.”
Adelaide-based Santos last year took a final investment decision on Barossa, a vital key to extending the lifespan of the Darwin liquefied natural gas export project and a prerequisite to selling stakes in related assets to Seoul-based SK E&S.
The field's extremely high carbon-dioxide content makes it one of the dirtiest gas projects in the world with double the emissions of the average for Australian LNG plants, according to a study by the Institute for Energy Economics and Financial Analysis, a non-profit which opposes development of new fossil-fuel operations.
See also: Gas Giant in Korea Accused by Activists of Greenwashing
The Export-Import Bank provided about 217 billion won ($179 million) to the project in 2017 and 2018, according to Seoul-based Solutions for Our Climate. Australia received over A$36 billion ($27 billion) for its fossil-fuel projects from overseas public financial institutions in the past decade, according to a joint report by activist groups including Jubilee Australia Research Centre.
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The Barossa field is expected to produce 1.3 million tons of LNG annually for 20 years from 2025, with a plan to use carbon-capture technology to remove emissions from its processing plant and inject them into a nearby marine waste gas field. However, IEEFA said in a February report that that would be a costly and ineffective plan as it wouldn't significantly alter the project's carbon dioxide emissions.
“We hope that we win this case and that no one will want to give any more money to the Barossa project,” Francisco Babui, a senior Tiwi traditional owner and plaintiff, said in the statement. “If they do, we will be ready to fight them too.”
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