Australia’s Santos is advancing its Bayu-Undan carbon capture and storage (CCS) project offshore Timor-Leste, for which front-end engineering and design work is nearing completion.

Santos on Thursday confirmed it had signed four memoranda of understanding for the proposed storage of third-party CO2 emissions to underpin initial development of the Bayu-Undan CCS scheme.

The final investment decision for Bayu-Undan CCS is targeted for 2025.

While Santos would name the companies involved, they are understood to be the operators of gas and liquefied natural gas projects offshore the Northern Territory and in Darwin, and a South Korean energy and industrial giant.

These initial deals indicate that demand for carbon dioxide storage at Bayu-Undan could exceed 10 million tonnes per annum.

“Bayu-Undan CCS ex-Darwin will be a relatively low-cost carbon solution, with costs expected to be well within the Australian government’s proposed price cap on Australian Carbon Credit Units,” commented Santos.

Bayu-Undan CCS has the potential to reduce absolute emissions and emissions intensity of Australian gas and LNG projects, as well as of other industries in the Northern Territory, by providing safe and permanent CO₂ storage in depleted gas condensate reservoirs.

“Importantly, Bayu-Undan CCS provides a potential Scope 3 emissions solution for Australia’s exports to Asia, with large customers in countries such as Korea looking to capture energy and industrial emissions and ship CO₂ to Australia for safe, permanent sequestration deep underground,” added project proponent Santos.

While the Bayu-Undan CCS project is located offshore Timor-Leste, Darwin in Australia’s NT is set to be an important regional hub for CO₂ capture, transfer and storage to Bayu-Undan as well as to other potential CCS locations offshore the Northern Territory, which are still in the exploration and feasibility stages.

Parties to the four memoranda will now work towards securing binding commitments, including one company looking at the opportunity for international CO₂ transfer and carbon management services.

Santos chief executive Kevin Gallagher said Timor-Leste is also well-positioned as a future provider of carbon management services.

“With CO₂ transport and storage demand only likely to grow, we will continue to work with the Timor-Leste and Australian governments to urgently progress the necessary regulatory and fiscal frameworks and approvals required to support the development of Bayu-Undan CCS,” Gallagher said.

“With Bayu-Undan CCS having a proposed pipeline capacity of 10 million tpa from Darwin, these MOUs indicate demand in excess of that capacity.”

The Bayu-Undan CCS project is situated within Santos’ Darwin and Bayu-Undan Hub, part of the company’s three hub CCS strategy that includes the Moomba CCS project onshore Australia, which is under construction and 60% complete. First injection at Moomba CCS is scheduled for 2024.