The Santos-led Bayu-Undan joint venture (JV) has agreed on the terms for a sale and purchase deed with TIMOR GAP, allowing the Timor-Leste state-owned company to join the Bayu-Undan upstream project.
TIMOR GAP will gain a 16% stake in the Bayu-Undan upstream project located in the Timor Sea. The transaction has an economic date of 1 July 2024.
The execution of this transaction is scheduled to occur in mid-September.
Alongside this transaction, a seventh extension of the production sharing contract has been confirmed, extending it to 30 June 2026.
The Bayu-Undan upstream project consists of an offshore petroleum field and offshore production and processing facilities located within the maritime boundaries of Timor-Leste. Before TIMOR GAP’s entry, the JV participants were Santos, SK E&S, INPEX, Eni, and Tokyo Timor Sea Resources.
Following the completion of the transaction, the stakes in the joint venture will be adjusted. Santos’ interest will decrease from 43.4% to 36.5%. SK E&S will see its interest reduced from 25% to 21%.
INPEX’s stake will decline from 11.4% to 9.6%, while Eni’s interest will be adjusted from 11% to 9.2%. Tokyo Timor Sea Resources will see its share decrease from 9.1% 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 I welcome them as a participant in the Bayu-Undan joint venture.”
Located approximately 500kms northwest of Darwin, the Bayu-Undan field has been operational since 2004. It is said to have significantly contributed to Timor-Leste’s economic growth, generating over $25bn in revenue since its inception.
More than half of the offshore workforce at Bayu-Undan is said to consist of Timorese nationals, and the project currently supports around 350 onshore and offshore jobs in Timor-Leste.
The project continues to produce gas for the Australian domestic market under a gas sales agreement with the Power and Water Corporation of the Northern Territory, in addition to producing liquid hydrocarbons.
Santos stated that is committed to working with Timor-Leste and other joint venture partners to transform Bayu-Undan into a large-scale commercial carbon capture and storage project once petroleum production ends. This initiative is expected to provide a continued source of revenue, create local employment opportunities, and offer business prospects for Timor-Leste by delivering carbon management services to the broader Asian region.
