Santos has been given the green light to begin drilling works in the Timor sea, although the Barossa project's gas pipeline is still the subject of a court dispute.
A group of Tiwi Islands traditional owners won a Federal Court bid last year to throw out the drilling approval at the multimillion-dollar gas field 265km northwest of Darwin.
The court ordered Santos to resubmit an environmental plan to the regulator that properly consulted with Tiwi traditional owners.
The National Offshore Petroleum Safety and Environmental Management Authority accepted the revised drilling plan late on Friday.
"Santos has conducted further extensive consultation with Tiwi Island people and other relevant persons consistent with the applicable regulations," the gas giant said on Monday.
While Santos can technically begin the drilling portion of the project, the validity of the gas pipeline is still being debated in the Federal Court.
Tiwi Islander Simon Munkara filed a challenge to the pipeline plans days before work was due to start in October, saying it would damage sea country and songlines.
Mr Munkara is arguing Santos has not properly assessed submerged cultural heritage along the route of its Barossa export pipeline, which runs within seven kilometres of Bathurst Island.
The company plans to extract natural gas from the Barossa field and transport it through pipelines to an existing liquefied natural gas facility in the Northern Territory.
Santos had hoped to begin laying the pipeline in November to keep the project on track for its first gas target in 2025, while waiting for NOPSEMA to approve the updated environmental plan for the drilling activity.
The new injunction, in force until mid-January allows Santos to work on the pipeline in an area about 75km north of the Tiwi Islands and further afield.
Mr Munkara argues the pipeline poses a significant new impact or risk to Tiwi underwater cultural heritage that was not assessed in Santos' original environment plan for the pipeline approved by NOPSEMA, the National Offshore Petroleum Safety and Environmental Management Authority.
If a significant new impact or risk arises, the law requires a titleholder to submit a proposed revision of an environment plan to the regulator for approval before work can continue.
The drilling approval comes as Santos confirms it is in talks with Woodside Energy on a potential $80 billion merger.
Woodside's $16.5 billion Scarborough gas project in Western Australia has also been delayed, with some parts of the project still waiting for regulatory approvals.
In midday trading, Woodside is down 0.2 per cent in the ASX to $30.51, and Santos is down 1.5 per cent to $7.635.
