Australia’s Santos has finalised negotiations with a state-owned oil and gas company of Timor-Leste, TIMOR GAP, to transfer a 16% interest in the Bayu-Undan upstream project. 

The sale and purchase deed is set to be executed in mid-September, with an economic effective date of 1 July 2024.  

The Bayu-Undan upstream project includes the Bayu-Undan field as well as production and processing facilities off the coast of Timor-Leste. 

The Bayu-Undan joint venture (JV), prior to TIMOR GAP's involvement, consisted of Santos, SK E&S, Inpex, Eni and Tokyo Timor Sea Resources.  

Following the completion of the transaction, Santos will hold a 36.5% stake, down from its current 43.4%.  

SK E&S will see its share reduced from 25% to 21%, INPEX’s interest will drop from 11.4% to 9.6% and Eni’s stake will decrease from 11% to 9.2%. 

Tokyo Timor Sea Resources’ share will fall to 7.6% from 9.1%. 

Operational since 2004, the Bayu-Undan field is located some 500km north-west of Darwin. 

According to Santos, the field has generated more than $25bn in revenue for Timor-Leste and supports approximately 350 jobs, both onshore and offshore. 

The project supplies gas to the Australian domestic market through a gas sales agreement with the Power and Water Corporation of the Northern Territory. 

Santos managing director and CEO Kevin Gallagher said: “I have long wanted to see TIMOR GAP as a partner of Santos and I welcome them as a participant in the Bayu-Undan joint venture.” 

Santos said it will work with Timor-Leste and the JV to repurpose Bayu-Undan into a major commercial carbon capture and storage (CCS) project once petroleum production ends. 

This initiative aims to provide ongoing revenue, jobs and business opportunities by offering carbon management services to Asia.  

A memorandum of understanding for the CCS project was signed last month by Santos and its JV partners with TIMOR GAP.