Gas producer Santos Ltd. was ordered to continue a halt on its $3.6 billion Barossa gas project off the north coast of Australia, after a court ruled in favor of Indigenous groups who argued they were not properly consulted on the plans.

The judgment, handed down by the Federal Court on Wednesday, means Adelaide-based Santos has two weeks to shut down drilling operations and remove its rig. Barossa, which involves the drilling of eight wells, is currently about 46% complete, according to the company.

“This is a disappointing outcome,” Santos said in a statement. “As a result of the decision, the drilling activities will be suspended pending a favorable appeal outcome, or the approval of a fresh environment plan. Santos will be seeking to expedite these processes.” The producer declined 1% in Sydney trading.

Communities in the Tiwi Islands, in the Timor Sea about 80 kilometers (50 miles) north of Darwin, said the producer had failed to adequately discuss with them the impact of drilling on the local environment and areas which they depend on for their livelihood. Tiwi elder Dennis Tipakalippa told the court his community has spiritual connections to an area of “sea country,” used by current residents and their ancestors for traditional hunting and gathering activities, according to the judgment.

Justice Mordecai Bromberg ruled the industry regulator, the National Offshore Petroleum and Safety Environmental Management Authority, had failed to ensure consultations were carried out and so could not lawfully sanction the drilling.

“The most important thing for us is to protect our sea country,” Tipakalippa said in a statement. “We want Santos and all mining companies to remember -- we are powerful, we will fight for our land and Sea Country, for our future generations no matter how hard and how long.” 

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Islanders had previously failed in a legal challenge aimed at blocking the Export-Import Bank of Korea and Korea Trade Insurance Corp. from lending as much as $700 million to the project. Santos controls 50% of the Barossa project, SK E&S Co. has 37.5% and Jera Co. holds the remainder.

“The ruling will slightly delay the drilling phase of the project,” an SK E&S spokesperson said. “There won’t be any disruptions to our expected schedule for the commercial production of LNG.” First production from Barossa is expected in the first half of 2025, Santos said in April.