Why did the Santos (STO) share price lift on Monday?

Today was a good day on the ASX for the energy producer.

| More on:
A wide-smiling businessman in suit and tie rips open his shirt to reveal a green t-shirt underneath

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Santos Ltd (ASX: STO) share price spent today in the green despite no news released by the company.

However, awareness of the company's carbon capture and storage (CCS) projects increased today.

On Friday, the Australian Government announced the Emissions Reduction Fund would provide carbon credits for CCS projects. Carbon credits can be used to offset an entities emissions or sold on the private market.

Santos welcomed the decision. It will now begin working to register its Moomba CCS Project with the Clean Energy Regulator.  

As a result of CCS's recognition as a viable method of reducing emissions, Santos' up and coming project is back in headlines today. The extra attention might have boosted the company's share price higher.

The Santos share price finished Monday's session trading at $7.08, 1.72% higher than its closing price on Friday.

That's a slightly better performance than that of the broader market. The S&P/ASX 200 Index (ASX: XJO) was up 1.1% while the All Ordinaries Index (ASX: XAO) gained 1%.

Let's take a closer look at the latest news around the energy producer.

Santos to receive carbon credits for Moomba

The Santos share price was up on Monday amid more attention on its upcoming CCS project.

The Moomba CCS Project is a disused gas reservoir that will soon store 1.7 million tonnes of carbon emissions each year.   

Under the Emission Reduction Fund, CCS projects like Moomba will now be eligible to receive carbon credits.

For every tonne of carbon stored in a Santos' CCS project, the company can receive one carbon credit. Carbon credits can be used to offset companies' emission outputs. They can also be sold for profit.

Right now, the spot price of an Australian carbon credit is around $26.

Despite the government's announcement and Santos' acknowledgement of the changes, the Santos share price fell 2.2% amid the broader market sell-off on Friday.

However, it picked up again today.

Commentary from management

Santos CEO and managing director Kevin Gallagher welcomed the news, saying:

The Australian Government's focus on CCS and other low-emission technologies sets Australia up to capitalise on our natural assets and become a carbon storage superpower, building on the position we have established as an energy superpower over more than half a century.

With the new CCS method now approved, Santos will seek to have the Moomba CCS Project registered and generate ACCUs through the Emissions Reduction Fund. Once the project has been registered, we will be in a position to make a final investment decision to proceed.

Minister for Energy and Emissions Reduction Angus Taylor also spoke of the changes to the fund:

[T]he new Emissions Reduction Fund method will incentive emissions reductions from a range of energy-intensive sectors including LNG production, which currently accounts for around 10 per cent of Australia's emissions…

This high-integrity method will position Australia to scale up clean LNG production and make use of our abundant geological storage potential.

Santos share price snapshot

Today's gains included, the Santos share price is 10% higher than it was at the start of 2021.

It has also gained 44% since this time last year.

Motley Fool contributor Brooke Cooper 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 Bruce Jackson.

More on Energy Shares

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

Guess which ASX 300 stock just rocketed 43% on big news!

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Energy Shares

4 reasons to buy Santos shares right now

A leading expert forecasts Santos shares and dividends are set to grow. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX 200 stock has rocketed 86% since April?

This sky rocketing ASX 200 stock continues to defy short sellers. But how?

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

4 ASX 200 energy shares making big moves today as OPEC's oil production set to surge

ASX energy shares, including Woodside and Santos, are making big moves today. But not all in the same direction.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Woodside share price charging higher on North West Shelf approval

Woodside has been working more than six years to gain an extension for its North West Shelf gas project.

Read more »

Gas and oil plant with a inspector in the background.
Energy Shares

Does Macquarie rate Origin Energy shares a buy, hold or sell?

The broker has given its verdict on the energy giant. Let's see what it is saying.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Ord Minnett tips Woodside shares to rise 15%+

Market-beating returns could be on offer from this energy giant.

Read more »