Santos : releases 2022 Climate Change Report

ASX / Media Release

30 March 2022

For personal use only

Release of 2022 Climate Change Report

Santos has today released its 2022 Climate Change Report which sets out our climate transition strategy and action plan to become a net-zero emissions1 energy and fuels business by 2040.

The Climate Change Report features the following milestones for Santos' journey to becoming Net Zero:

• • New 2030 targets of a 30 per cent reduction in absolute emissions1, a 40 per cent reduction in emissions intensity1 and a Scope 3 target to reduce customer emissions by 1.5 million tonnes of CO2e per annum

• • A commitment to only selling our products to customers from countries that have a net-zero commitment or that are signatories to the Paris Agreement

• • A Climate Transition Action Plan, including phased, value-accretive, Paris-aligned capital investment

• • A final investment decision on the Moomba carbon capture and storage (CCS) project which is expected to store 1.7 million tonnes of carbon dioxide per annum, making it one of the world's biggest CCS projects

• • 100 million tonnes of CO2 storage capacity booked in South Australia's Cooper Basin, one of the first such bookings in the world

• • Final investment decisions on new offshore greenfield projects from 2025 will require abatement or offset of reservoir CO2 emissions

In step with the goals of the Paris Agreement on climate change and aligned with international reporting standards, the 2022 Climate Change Report affirms that Santos is well placed to manage the risks of climate change, continue to drive sustainable shareholder returns from long-life, low-cost natural gas assets and seize the opportunities associated with the global transition to provide cleaner energy and clean fuels over coming decades.

Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos is well positioned to decarbonise its natural gas business and generate new revenue streams through carbon solutions such as carbon capture and storage utilising existing infrastructure and depleted natural gas reservoirs, providing a platform to develop clean fuels such as hydrogen as customer demand evolves over time.

"With a strong, low-cost base business supplying natural gas to meet ongoing customer demand and a clear action plan to develop cleaner energy and clean fuels, Santos remains resilient, value accretive and at the leading edge of the energy transition to a low-carbon future," Mr Gallagher said.

1 Equity Scope 1 and Scope 2

Media enquiries	Investor enquiries	Santos Limited ABN 80 007 550 923
Claire Hammond	Andrew Nairn	GPO Box 2455, Adelaide SA 5001
[phone]	[phone] / [phone]	T [phone] F [phone]
[e-mail]	[e-mail]	www.santos.com

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"Last week, at the International Energy Agency's invitation, I participated in the 2022 IEA Ministerial meeting. This important event, involving energy ministers of member countries and around 30 global business leaders focused on accelerating global action on clean energy without compromising energy security.

"This year's Climate Change Report comes as countries around the world are finding that energy and fuel price stability and supply security risks, remain critical considerations on the journey to Net Zero. With natural gas playing a central role in decarbonising energy markets and balancing renewable energy, more investment is needed to ensure supply can keep pace with demand and to diversify supply sources.

"This is a great opportunity for our projects in Australia, Papua New Guinea and Timor-Leste.

"It is vitally important that new supply investment happens in a sustainable way. Companies like Santos, which are publicly listed, subject to ESG scrutiny by their investors and which report transparently on carbon emissions and their climate transition plans, are best placed to supply critical fuels such as oil and gas more sustainably, striving for lower emissions intensity and better environmental outcomes. Divesting assets and driving investment in new supply to less transparent producers will not reduce global emissions or advance the transition to Net Zero.

"A just transition that focuses on reliability, affordability and decarbonisation is critical to ensuring broad global support for the huge task ahead of us as we reach our net-zero targets."

Last year Santos announced our intention to provide shareholders with a non-binding advisory vote on the company's Climate Change Report at the 2022 Annual General Meeting. In this year's report we set out our Climate Transition Action Plan and seek the support of our shareholders for our climate transition approach at our forthcoming Annual General Meeting.

We will continue to publish an annual Climate Change Report including our progress towards our targets and action plan.

The 2022 Climate Change report is available atwww.santos.com.

Ends.

This ASX announcement was approved and authorised for release by Kevin Gallagher, Managing Director and Chief Executive Officer.

Santos Limited ABN 80 007 550 923

GPO Box 2455, Adelaide SA 5001

T [phone] F [phone]

www.santos.com

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Supplying critical fuels more sustainably

2022 Climate Change Report

Overview

Contents | Report overview

Acknowledgement

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We acknowledge the Traditional Owners of the land where we operate and work. We recognise their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and emerging.

Context

In December 2021, a merger between Santos Limited and Oil Search Limited was completed. This report covers the merged entity's climate-related strategy, governance, material risks and opportunities, targets and metrics. Where possible, relevant data from the former Oil Search Limited operations have been included in this report, including 2020-21 greenhouse gas emissions data.

Disclaimer and forward-looking statements

This report contains forward-looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gas commercialisation, development progress, operating results, engineering estimates, reserves and resource estimates, loss of market, industry competition, environmental risks, carbon emissions reduction and associated technology risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries, approvals, conduct of joint venture participants and contractual counterparties and cost estimates.

The forward-looking information in this report is based on management's current expectations and reflects judgements, assumptions, estimates and other information available as at the date of this document and/or the date of Santos' planning processes. There are inherent limitations with scenario analysis. Scenarios do not constitute definitive outcomes. Assumptions may or may not be, or prove to be, correct and may or may not eventuate, and scenarios may be impacted by factors other than assumptions made. Except as required by applicable regulations or by law, Santos does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information or future events. Forward-looking statements speak only as of the date of this report or the date planning process assumptions were adopted, as relevant. Our strategies and targets will adapt given the dynamic conditions in which we operate; it should not be assumed that any particular strategies, targets or implementation measures are inflexible or frozen in time.

No representation or warranty, express or implied, is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forward-looking information contained in this report. Forward-looking statements do not represent guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond Santos' control, and which may cause actual results to differ materially from those expressed in the statements contained in this report.

Overview

Contents | Report overview

Contents

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Report overview

Task Force on Climate-related Financial Disclosures Highlights

Introduction: Supplying critical fuels more sustainably

Chair's message

Chief Executive Officer's introduction Our approach to climate change

A track record of action on climate changeClimate Change Policy

Strategy: Transform, build, grow

Our journey to net-zero emissions by 2040

Combining with Oil Search

Our targets

Metrics: Transparency and integrity

Emissions sources

Emissions calculation and reporting Scope 1 emissions

Scope 2 emissions Scope 3 emissions

Case study: Working with customers to help them reduce their emissions

Delivery: Investing today to deliver cleaner fuels tomorrow

Climate Transition Action Plan

Operational efficiencies

Case study: Operational efficiencies in PNG

Case study: Technological developments increasing efficiency Carbon Capture and Storage

Case study: Moomba CCS project Case study: Bayu-Undan CCSCarbon solutions

29

1 2

Clean fuels hubs

30

Case study: Collaborating with CSIRO on step-change emissions reductiontechnology

31

Supply chain collaboration

32

4

Aligning capital allocation with our Climate Transition Action Plan

33

5 6

Supporting a sustainable and just transition

34

8

Scenarios: Resilient through the transition

9

Scenarios modelled

36

Scenario inputs

39

Key insights from scenario analysis

40

11 12

Opportunities and risks

41

13

Risk management: Responsibly managing through the transition

16 16 17

Integration of climate Risk management Material climate risks

Managing material climate risks - Transition and Physical

43 43 47

Case study: 2021 Australian and Timor-Leste operations physical risk assessment

48

18 19 19

Governance: Embedded accountability

Climate oversight, skills and experience Executive remuneration

Climate advocacy

50 52 52

21

Disclosure frameworks

52

23

24

Additional information

25

26

Greenhouse gas emissions data Definitions and abbreviations

54 56

27

28

TCFD recommendations reference guide Assurance statements

57 61

Task Force on Climate-related Financial Disclosures

This is Santos' fifth Climate Change Report aligned with the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Previous climate change reports are published on our website,www.santos.com.

The report addresses the four TCFD disclosure topics below. A guide to the detailed TCFD disclosure recommendations and where they are addressed in the report is provided on pages 57 to 60. Assurance has been undertaken by Ernst & Young (EY) and the assurance statement is provided on pages 63 to 64.

Governance:

The organisation's governance around climate-related risks and opportunities.

Strategy:

The actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy and financial planning.

Risk management:

The processes used by the organisation to identify, assess and manage climate-related risks.

Metrics and targets:

The metrics and targets used to assess and manage relevant climate-related risks and opportunities.