Australia's two largest oil and gas producers, Woodside Energy and Santos, may experience a decline in LNG production in the upcoming years. 

A predicted downturn is being attributed to the stalling of projects worth $22 billion due to legal and environmental challenges. 

As the Federal Court deliberates on Santos' critical pipeline for its $5.8 billion Barossa gas project, uncertainty looms over the future of LNG production.

Woodside, requiring approvals for its $16.5 billion Scarborough gas project in Western Australia, faces similar setbacks. 

These projects are central to the proposed mega-merger between Woodside and Santos, which aims to establish a global LNG player. However, this ambitious merger is challenged by the impending short-term production dip and investor demands for a higher price.

The merged entity would predominantly produce LNG, potentially becoming a significant global player. The combined Woodside-Santos production could surge from 16 million to almost 23 million tonnes annually by 2028. 

This growth aligns with analyst’s view that the merger could rival major oil companies in the LNG sector.

However, the legal disputes, particularly against the Barossa project, cast doubt on this growth trajectory. Experts say projects like Scarborough and Barossa are more about maintaining current production levels rather than increasing them.

The ruling on Santos' Barossa pipeline is crucial, especially for its commitments to Japanese and Korean customers. 

Delays in the project could have significant repercussions. Moreover, the ongoing due diligence for the Woodside-Santos merger is complicated by uncertainties surrounding Barossa.

In a broader context, Australia's position as a leading LNG exporter has been challenged by the United States. The outcome of the Federal Court's decision and the resolution of the merger complexities will be pivotal in shaping the future of Australia's LNG industry.