Santos’ stake in the project will decrease from 43.4% to 36.5%. Credit: T. Schneider via Shutterstock.

Australia’s Santos has finalised a sale and purchase deed for the transfer of a 16% interest in the Bayu-Undan upstream project to TIMOR GAP.  

This transaction allows TIMOR GAP, the state-owned oil and gas company of Timor-Leste, to participate in the Bayu-Undan joint venture (JV) for the project’s remaining economic life. 

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The production-sharing contract for Bayu-Undan is set to terminate on 30 June 2026 or upon the cessation of production, whichever comes first. 

Bayu-Undan’s upstream project consists of an offshore petroleum field and associated production and processing facilities in Timor-Leste. 

The Bayu-Undan field, operational since 2004 and located about 500km north-west of Darwin, has been a key revenue generator for Timor-Leste, contributing more than $25bn and supporting around 350 jobs.  

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The project supplies gas to the Australian market under a gas sales agreement with Power and Water Corporation while also producing valuable liquids. 

Following the completion of this deal, Santos’ stake in the project will decrease from 43.4% to 36.5%.  

Similarly, the shares of other JV partners will also be adjusted, with SK E&S’ interest reducing to 21%, Inpex‘s to 9.6%, Eni‘s to 9.2%, and Tokyo Timor Sea Resources’ to 7.6%. 

Santos managing director and CEO Kevin Gallagher said: “I have long wanted to see TIMOR GAP as a partner of Santos and look forward to welcoming them as a participant in the Bayu-Undan JV. The project has created local jobs, it has generated revenues for government and driven investment in building stronger and more resilient communities.  

“We are delighted to have executed agreements relating to this transaction. The Bayu-Undan field continues to perform beyond expectations of its productive life.” 

Santos has plans to collaborate with Timor-Leste and the JV partners to repurpose the Bayu-Undan site into a major commercial carbon capture and storage project after the cessation of petroleum production.  

This initiative, supported by a memorandum of understanding signed last month, aims to continue providing revenue, jobs, and business opportunities by offering carbon management services to Asia.