South Korean contractor Samsung C&T has joined Australian junior Pilot Energy to advance the Cliff Head carbon capture and storage (CCS) project offshore Australia.
Pilot is proposing to develop Australia's first offshore CCS project through the conversion of the Cliff Head field and associated facilities from oil production to carbon capture and storage as part of the Mid West Clean Energy Project.
Pilot currently holds a 21.25% interest in the Cliff Head oilfield and Cliff Head infrastructure, which will increase to 100% on completion of its acquisition of compatriot Triangle Energy’s stake, and a 100% working interest in the related exploration permit, WA-481-P, located offshore Western Australia.
The Cliff Head CCS project and the proposed clean ammonia project is now collectively known as the Mid West project.
Pilot confirmed that Samsung is coming onboard the Mid West project as joint development partner following the signing of a conditional memorandum of understanding. The duo will jointly fund and progress the project on a pro rata basis commensurate with their respective partnership interest.
Subject to key conditions being satisfied, Samsung C&T will acquire a 20% stake in the project and also have rights to be the engineering, procurement and construction partner for the clean ammonia project. Samsung is also tasked with giving its best shot to arrange for clean ammonia offtake for export to South Korea.
Pilot will be paid around A$67 million (US$42.5 million), which is based on historical construction cost of the Cliff Head oil project, at the financial close of the deal. This will form the foundation assets of the Mid West project.
The Cliff Head operator noted this consideration is subject to conditions including a minimum forecast internal rate of return for the CCS project to be agreed between the parties, completion of the integrated project pre-front engineering and design study, and final board approval from each company.
“Samsung C&T’s participation is an important step as they provide additional technical expertise and financial strength to ensure the successful development of this exciting Western Australian clean energy project,” commented Pilot chairman Brad Lingo.
“Furthermore, it continues the strong partnership and ongoing trading relations between Australia and Korea.”