Concluding long-running negotiations, Santos on Monday announced a deal to transfer a 16 per cent interest to the national oil company Timor Gap.
The Bayu-Undan field, in operation since 2004, is located 500 km off Darwin in Timor-Leste waters.
Santos said it was committed to working with Timor-Leste to repurpose Bayu-Undan into a large-scale, commercial carbon capture and storage (CCS) hub.
Under the sale and purchase deed, Santos' 43.4 per cent interest in Bayu-Undan will reduce to 36.5 per cent.
"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," managing director Kevin Gallagher said.
The existing project comprises the offshore petroleum field, and offshore production and processing facilities located in Timor-Leste.
Serving industrial customers in Australia, Japan, Korea and across Asia, the project is part of Santos' plan to use several CCS hubs to offset decades-more production of gas.
The other parters in the Bayu-Undan field are SK E&S (21 per cent), INPEX (9.6 per cent), Eni (9.2 per cent) and Tokyo Timor Sea Resources (7.6 per cent).
Santos also announced an extension to a production-sharing contract to June 30, 2026.
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