Santos and another oil firm pooling resources for CCS project off Timor-Leste

Australian energy giant Santos and its joint venture partners have inked a memorandum of understanding (MOU) with Timor-Leste’s national oil company, TIMOR GAP, to explore partnership opportunities for a proposed carbon capture and storage (CCS) project at a gas and condensate field in the Timor Sea.

This MOU, which has been signed for the Bayu-Undan CCS project located offshore Timor-Leste, follows four non-binding MOUs for CO2 supply to the CCS project, indicating demand for CO2 storage at the project could be more than 10 million tonnes per annum (Mtpa). The latest MOU encompasses sharing information about Bayu-Undan CCS and exploring potential partnership opportunities, including equity participation for TIMOR GAP in the project.

While explaining that Bayu-Undan CCS is well positioned to provide future carbon management services to the Asia Pacific region, Kevin Gallagher, Santos Managing Director and Chief Executive Officer, remarked: “This could be an exciting new industry for Timor-Leste, putting it at the leading edge of the global energy evolution and generating revenue, local jobs and business opportunities for the nation.

“Santos and our joint venture partners are delighted to be working with TIMOR GAP on partnership opportunities to advance Bayu-Undan CCS as a carbon storage hub for customers in Australia, Japan, Korea, and across Asia as those countries seek to decarbonise their economies.

“This MOU is yet another agreement highlighting the strong interest in carbon capture and storage, and its broad acceptance as a safe, proven technology that is absolutely critical to achieving the world’s climate goals. We look forward to working with TIMOR GAP and the Timor-Leste and Australian governments to progress the necessary commercial, fiscal, and legislative arrangements to support the development of the Bayu-Undan CCS project.”

After Santos signed a memorandum of understanding with the Timor-Leste regulator, Autoridade Nacional do Petróleo e Minerais (ANPM), in September 2021 to progress CCS at the Bayu-Undan field, the firm confirmed that the proposed CCS project entered the front-end engineering and design (FEED) phase in March 2022. At the time, the firm explained that the Bayu-Undan FEED work would include engineering and design for additional CO2 processing capacity at Darwin LNG.

According to the company, the Bayu-Undan CCS (ex-Darwin) will provide a cost-competitive carbon solution because of its large scale and ability to utilise existing pipelines and other infrastructure. The project benefits from the storage reservoirs, which are well understood, previously held gas and condensate in place for tens of millions of years, and are expected to provide safe and permanent CO2 storage.

Santos believes that this project has the potential to reduce the absolute emissions and emissions intensity of Australian and Timor-Leste gas and LNG projects, as well as other hard-to-abate industries in the region. In addition, this is anticipated to enable Australian and Timor-Leste gas and LNG projects to have a competitive advantage in a low-carbon world, with the potential to offer abated gas as a premium product for customers.

Santos is the operator of the Bayu-Undan offshore gas production facility and Darwin LNG with a 43.4 per cent interest in each while the remaining partners are SK E&S (25 per cent), Inpex (11.4 per cent), Eni (11 per cent), and Tokyo Gas (9.2 per cent).

The Bayu-Undan CCS project is part of the Australian giant’s three-hub CCS strategy that includes the Moomba CCS project, now 70 per cent complete and on track to store up to 1.7 million tonnes of CO2 per year starting in 2024.