Australia Wants to Sell Japan the Gas and Then Bury the Carbon — Santos Is Studying Both Ends

Australia Wants to Sell Japan the Gas and Then Bury the Carbon — Santos Is Studying Both Ends Santos's Moomba CCS would import up to 20 million tonnes of Japanese CO2 a year by 2040, a new export industry in reverse, landing as ADNOC bids $18.7bn for the company. Santos has agreed to study the potential of importing CO2 from Japan to its Moomba carbon-capture-and-storage project, shipped in via either Gladstone in Queensland or Port Bonython in South Australia.⁴ The targets are specific and large: 5 million tonnes per annum by 2030, rising to 10 million by 2035 and 20 million by 2040.⁴ Santos says Moomba CCS is already delivering emissions reduction at scale, and the import study would turn it into something more ambitious, a transnational sink for another country's carbon.⁴ It matters because it points to a new role for Australia in the energy system, one that runs in both directions. The country is the top supplier of liquefied natural gas to resource-poor Japan, a relationship the two governments have just deepened with an energy cooperation pact that also covers critical minerals.² The Moomba study extends that relationship to its logical conclusion: Australia sells Japan the gas, and then takes back and buries the CO2 that burning it produces. Selling the fuel and storing the emissions is a full-cycle business model, and it could become a genuine export industry built on geology rather than reserves. The scale of Australia's gas position is what makes the carbon-storage role plausible. Some forecasters estimate Australian LNG production over the next decade will pass Qatar's and reach up to 100 million tonnes a year.¹ A country exporting that volume of gas has both the commercial relationships and the strategic interest to offer its customers a way to manage the resulting emissions, and Moomba's depleted gas fields are exactly the kind of formation suited to permanent CO2 storage. The timing is sharpened by a takeover fight for the company at the centre of it. Santos shares surged as much as 15.23% after it received a non-binding $18.72 billion takeover offer from an Abu Dhabi National Oil Company-led group, at $5.76 a share, a 27.73% premium to the prior close.³ The bidding vehicle, XRG, carries an enterprise value of over $80 billion and has been hunting for deals in natural gas, chemicals and lower-carbon energy solutions.³ Moomba CCS and the Japanese CO2-import study sit squarely in that lower-carbon category, which means the carbon-storage ambition is part of what a Gulf oil major is paying a premium to acquire. That overlap is the strategic read. A buyer with ADNOC's profile is not bidding for Santos purely for its gas reserves; it is buying an integrated position that includes a carbon-storage business with a pipeline of international customers.³ If Moomba can credibly store 20 million tonnes of imported CO2 a year by 2040, that capacity has standalone value to whoever owns it, and it reframes the takeover as a bet on carbon management as much as on hydrocarbons.⁴ The risk is that cross-border CO2 transport at this scale is unproven and capital-intensive. Shipping carbon from Japan to Gladstone or Port Bonython and injecting it at Moomba requires liquefaction, dedicated vessels, port infrastructure and long-term contracts, none of which exists yet at the targeted volumes.⁴ The 5-million-tonne 2030 milestone is the near-term test of whether the economics and the engineering hold, and a study is not a final investment decision. The signal to watch is whether the Japan CO2-import study converts into binding offtake and infrastructure commitments, and how the ADNOC bid resolves alongside it.^4,3 If Santos locks in Japanese carbon volumes and the takeover proceeds, Australia gains a new export industry storing Asia's emissions, and the country's gas franchise extends into carbon management. If the volumes stay hypothetical, Moomba remains a domestic emissions-reduction project with international ambitions it has not yet funded. Either way, the model of selling the gas and burying the carbon is now on the table, with a $18.7 billion bid attached to it.^4,3