Santos has won a court battle over Gladstone LNG project construction work that will see Fluor Australia pay out more than $692 million.

The case centred on an engineering and construction contract that Santos entered into with Fluor in 2011 for the development of upstream coal-seam gas production facilities for the GLNG project.

Fluor is reviewing the decision and said the final judgement was not expected until later this year.

Santos argued that Fluor was not entitled to all the costs it had claimed and received in payment on the over-time and over-budget project.

The company sought to recover those amounts and also made claims to recover liquidated damages associated with the late completion of the project.

In a decision handed down on Friday, Santos said the Queensland Supreme Court upheld the majority of the findings in a report delivered in 2023 by three referees who said Santos was entitled to recover certain costs.

This affirmed that Fluor must pay at least $692 million to Santos and its co-venturers, with further sums owing, and the final amount ordered in Santos’ favour (with interest plus legal costs) to be determined in the coming weeks.

Fluor had challenged the findings of the referees.

In a written statement, Fluor Corporation acknowledged the August 8 decision in favour of Santos, saying the court generally accepted the recommendations of a panel of referees that was appointed to oversee the case despite Fluor’s objection. 

“The dispute has been ongoing since 2016 over Santos’ efforts to recover costs related to a reimbursable project completed by Fluor in 2015,” the company said.

“Further arguments and input from both parties will be heard by the court before a final judgment is delivered sometime later this year.

“Fluor maintains the contracting principles addressed by the court have wide-sweeping consequences in the engineering and construction industry.

“The company is reviewing the court decision and exploring its response including the timing of its appeal. We are also working with our insurance carriers to address the obligations arising from the final judgment.”

Court documents show Santos commenced proceedings for alleged overpayments totalling more than $1.4 billion.

It also sought damages of about $140 million for an alleged contravention of Australian Consumer Law, and liquidated damages of $15 million for an alleged failure of Fluor to reach mechanical completion by the contractual dates.