Santos Limited (STO) Earnings Call Transcript & Summary

[Presentation] Good morning, everyone, and welcome to this briefing on Santos' 2022 Climate Change Report. My name is Andrew Nairn, and I'm Head of Investor Relations here at Santos. Welcome to everyone here in the room in Sydney. Thank you for joining us, and also welcome to everyone joining us on the live webcast. I'd like to acknowledge this morning, we meet on the traditional lands of the Gadigal people of the Eora Nation. And I pay my respects to their elders past, present and emerging. I also recognize all the traditional owners of the lands on which Santos operates across Australia, Timor-Leste, Papua New Guinea and the United States. Just a safety moment to start. If for any reason, we need to evacuate the venue here in Sydney, please follow the instructions from the fire warden here at Freehills. So our agenda this morning, I'll refer you to the disclaimer on the first slide, as always. Our agenda this morning, we're aiming to run for about 2 hours. We'll start with an introduction and discussion of strategy from CEO, Kevin Gallagher. Then Jane Norman, Vice President of Strategy, will talk about markets and resilience. Then we'll have the 2 Bretts, who will talk about their sections of the business, Mr. Darley on Upstream and Mr. Woods on midstream and clean fuels, respectively. And then Kevin will come back to wrap up and host Q&A. We'll have Q&A from here in the room. We'll have a microphone moving around. And then you can also submit a question on the webcast, and we'll read those out time permitting. Thank you, and I'll hand over to Kevin.

Thank you, Andrew, and good morning, everyone. We'll get straight into it. I think we've got about 2 hours this morning, and I do want to finish on time because I recognize it's a huge commitment from all of you here today. So I'm going to get straight into the presentation, and we'll try and get as much time as we can at the end for Q&A. I'm sure there'll be some. I want to start here by talking about our aim as an organization. Our aim doesn't change because we're talking about transition, transition to a new environment, to a lower carbon world over the decades in front of us. It doesn't change the fact that we aim to deliver superior returns to our shareholders at all times. We aim for that every day to day with our base business, and we'll be aiming for that during the transition. And for us, that's about building a business that continues to deliver strong returns to all of our shareholders, our stakeholders whilst being a leader in that transition longer term. So we don't want to sacrifice our aims of delivering strong returns during that transition. That's really important to us, and we believe what we're going to share with you today is a plan that allows us to do that. And so it's very important to us that what we're not talking about is high-level ideal targets without substance. What we're going to share with you today is a real plan that we're working on. We're developing real projects, driving us to become a leader in this space over time. And I think that's what I'll share with you in a minute, the high-level strategy, and Jane's going to take you through other aspects of that. And then you'll hear from the people running the business themselves, and they'll talk about the projects and the activities that they're doing today to build that better future for our business. I will talk and take you through that action plan, that real plan. We've shared that in the climate change report this year for the first time, and that's a journey that's taken us from talking about high-level road maps to an actual plan that we'll be able to come back to you every year and report progress against. And of course, every 3 years or so, take time out to check and get feedback from our investors on how we're doing on that plan and the appropriateness of that plan over time. That plan aims to decarbonize our products and create new revenue streams, not just new revenue streams from those products, but you'll hear a lot about CCS today. I mean not just revenue streams from those clean fuels, but also revenue streams from our offsets and carbon credits that we create from our other businesses. And that's a big part of our focus going forward, is building businesses that generate carbon credits that not only we use to offset emissions from our base business, our old business, if you want to call it that, but that we sell into markets to help other companies abate their sectors, the hard-to-abate sectors, and we get good carbon prices for those. So it's about generating as much credit as we can from our operations for as low a cost as we can to sell for the highest price we can. So essentially, thinking of carbon as a commodity for the future and making that our business, another product that we can sell into the market. We'll continue to exercise discipline. So just like we put in place in 2016, our disciplined operating model, nothing changes. We'll allocate that capital using the same disciplined approach that we've been using over the last 5 or 6 years in order to leverage off our existing infrastructure footprint so we get those higher-return, lower-cost projects and give us a stronger portfolio at the end of the day that delivers those returns I was talking about earlier. And it's important, though, that we recognize as a transition and the transition to clean fuels to the hydrogen type fuels of the future will be a market-led transition. We can't make it before people want to use it. That's a quick way to go out of business. We can't make it until the technologies to transport it efficiently and economically are in place. But we can drive those technology developments, and we can be ready to take first-mover advantage when those opportunities exist. But all the way through that transition, we must be able to continue to supply reliable and affordable energy around the world to the communities and to the countries that need that along the way. So whilst we're decarbonizing that, it's very important to recognize we'll still be very focused on supplying those fuels that we supply today reliably and affordably to continue to meet those demand forecast. And you'll see what those demand pictures look like as we go through the presentation. Our strategy actually is no different to the strategy we rolled out in 2016: transform, build, grow is the way that we approach our strategy, an evergreen sort of holistic approach to running the business. The transformation, which is talking about continually improving our business, taking -- resetting our cost base, continually focus on getting that free cash flow breakeven number as low as we possibly can so that we deliver strong cash flows from our asset base throughout the cycle. And we've demonstrated that in our core business over the last 5 or 6 years repeatedly. But we're going to continue to do that because the world is continually changing, and we've got to free up the cash to invest in some of these new projects as we transition. And you can see here about high-level descriptors here, about the transform and in the build, which is about building around those existing infrastructure hubs that we have today and leveraging off of that infrastructure, trying not to repeat infrastructure build where we don't have to. Utilize existing projects so that most of our new activities are brownfield or at least leveraging off of that existing infrastructure so that we can get those projects up and get the cost of supply as low as we possibly can and create that competitive advantage from being a low-cost producer of whatever fuels we're supplying to the market. And then growing the business, and you'll hear us talk today about growing the business and growing the revenues, new revenue streams, revenue streams from carbon credits, revenue streams from clean fuel sales as well as maximizing the returns we get from our existing products that we're going to continue to supply over the next few decades. And that strategy has delivered a lot in the last 5 or 6 years. And if you think of the different periods we've been operating through, go back to 2016, '17, it was a very different world. That was when we really were focused on the transformation and taking the cost base and resetting that cost base, getting rid of non-optimum assets and really optimizing our portfolio or rationalizing quite considerably our portfolio to focus on the 5 core long-life natural gas assets that we talk about today. We've put in place a disciplined low-cost operating model, which ensured that every dollar of capital we're spending across the business had to go through rigorous screening before any of those projects got up, and we only prioritized the best project. And of course, we're very focused back in those days of getting the debt down. We had a very weak balance sheet back in 2016. And so '16, '17 was all about resetting that. Between '18 and '20, it was really around some strategic acquisitions and using those acquisitions to increase our operating footprint and then drive synergies across the business to take our breakeven cost down even lower. And we're very successful in doing that with the acquisition of Quadrant Energy in Western Australia and of course, the acquisition of ConocoPhillips assets up in offshore Darwin. And of course, last year, we merged with Oil Search, and that's taken us to a whole new level of scale, size and scale, strengthened the balance sheet considerably and put us in a position where we can start to really prioritize shareholder returns for the journey in front of us, the transition journey. We're still in a position, though, and a place where we have to have that disciplined execution of backfill projects. We got Barossa on the go, for example, right now. And we'll talk -- Brett will talk about the Bedout Basin and the backfill strategy there for Varanus Island long term with the gas offshore Western Australia. And of course, that will be a priority over the next 3 to 5 years, is executing those projects whilst decarbonizing the business, investing in CCS projects. We're already FID-ed the Moomba CCS project, the second largest in the world to date. And Brett Woods will take you through more detail about that project later this morning and how that's going and why we're so confident that, that can lead to some bigger, better outcomes in the years ahead. And we've recently taken feed on Bayu-Undan CCS and looking to repurpose the Bayu-Undan facilities and Darwin pipeline to use that for what would become the largest CCS project in the world. And I think that's as good an example as you're ever going to see of what we talk about leveraging off existing infrastructure. So the alternative plan is to decommission it all and lock it up forever at the end of field life towards the end of this year or alternatively repurpose it and turn it into a very significant CCS project that can take up to 10 million tonnes per annum of CO2 from all sorts of projects and other companies in the region, not only our projects, but third parties take their CO2 and help them decarbonize, generating carbon credits along the way that hopefully leads to new revenue streams for Santos and our joint venture partners. And then between 2025 through the end of this decade, it's really about focusing on in the upstream business, maintaining that safe, reliable and affordable supply of energy from those assets, while the midstream starts to generate those new revenue streams over and above the toll and tariff revenue it gets today. And of course, driving our carbon solutions group to find more and more new business opportunities in that space as well. Reflecting on the last 5 years or so, there have been some deliverables along the way, some achievements along the way that we thought it's worth pulling out today. Obviously, last year, we announced our net zero scope 1 and 2 emissions by 2040. And some people say, "Why did you pick 2040? Everybody else is saying 2050." And it's not virtue signaling. It's not just because we wanted to put out a target out there that look better than everyone else's, it's because we see a business opportunity. And I think that's really important. We're not doing this just because we have to. We're doing this because we see a business opportunity to be first past the post. We see a first-mover advantage in not only getting to net zero, but building the businesses that make money by being net zero or being net negative, in fact, We've got some amazing resources and assets that allow us to do this at low cost, and that's what we want to leverage off. Of course, we're going to talk about the climate transition action plan, or CTAP as it's known within Santos, a name that makes me uncomfortable, but nonetheless, we're getting used to it. We're still getting used to it. Our 2025 emission reduction targets we set a few years ago, we've achieved them 3 years early. We've achieved them 3 years ahead of plan, and we'll talk about some of the projects that have contributed to that. Part of it has been, since 2017, reducing our emissions across those onshore assets by just over 300,000 tonnes per annum. That's from our Energy Solutions group driving a lot of energy efficiency and emissions reduction projects across all of our assets across all of our portfolio, taking 300,000 tonnes per annum emissions out of the system in that time frame. And of course, I've already said, we took final investment decision on our Moomba CCS project last November. And we entered FEED recently for the Bayu-Undan CCS project, along with all of our joint venture partners in Darwin. And of course, at the start of this year, we believe we're the first company in the world to actually make a storage capacity booking, reserves booking or capacity booking by booking 100 million tonnes of resource storage capacity in the Cooper Basin. Now we talk about the Cooper Basin having up to 20 million tonnes per annum of storage capacity for more than 50 years, and you can do the math on that, and that's a lot of reservoirs that we're currently -- were either depleted previously or we're currently depleting as we produce from them. But that's 1 billion tonnes of capacity over the life of those fields. And that's really significant in the global context of CCS going forward and what that enables us to think about doing for our business. In our climate change report this week, we've also announced new targets, our new interim 2030 targets. In addition to our net zero by 2040 target, we've got an absolute target to reduce our absolute emissions by 30%, scope 1 and 2 emissions by 30% by 2030. That's a first significant step in absolute emission reduction by 2030 on our way to net zero by 2040. Reduce our intensity, our emissions intensity, by 40% by 2030. And in scope 3, reducing customer emissions by 1.5 million tonnes per annum by 2030 by the sale of clean fuels. I think what's really important is also to pull out a couple of commitments that have come through or that we've released as part of our climate change report this year that we think are very significant. And they're both on this slide. You can see the first one where we've committed to only selling our products to customers from countries that have either a net zero commitment or that are signatories to the Paris Agreement. And so that's a big commitment in terms of aligning with net zero by 2040 because of, I guess, in their cases, by 2050 for most of the countries, if they have that net zero commitment, then by definition, they are reducing our scope 3 emissions on their journey to net zero. And of course, the final investment decisions on new offshore greenfield projects from 2025 onwards will require all scope 1 and 2 emissions, or all reservoir emissions, I should say, all reservoir emissions to be either offset or fully abated before we would take an FID decision on those projects. So there's some big commitments we're making along with those targets. And hopefully, that gives you confidence that we're thinking about this challenge and this journey as a holistic one for us. It's a business priority because we see the business opportunity. We see the competitive advantage opportunity for Santos. So we talk about CTAP, the climate transition action plan. And I think what's really important here is -- and we've been challenging ourselves is we don't want a target without a plan. And I think we said at a previous Investor Day that anybody can come out and say they're going to be net zero. Anyone can say that, but how are they going to do that? And what are the real steps they're going to take is the hard part, right? Putting meat on the bone of a plan. And hopefully, you can see here we've got real activities, and I've walked through this. You think of the operational efficiencies to start there. That's those projects I've been talking about that we spent more than $100 million on over the last 3 or 4 years, more than USD 100 million on projects to reduce emissions by 300,000 tonnes per annum to date. There's around another $400 million between now and 2030 for similar-type energy efficiency projects. A lot of these are very small projects, and they'll happen over that period of time, efficiencies, replacing kit, upgrading kit, et cetera, and so that they can be quite small in isolation. But they're all in the plans, and they're identifying projects that we expect to spend around $400 million between now and the end of the decade, reducing emissions and increasing energy efficiency. And that would include things like the use of more renewables, electrification of upstream operations across some of our assets and onshore assets in particular. Carbon storage and capture -- or carbon capture and storage, going to capture it before you store it projects, around all of our 3 hubs, our 3 key midstream and clean fuel hubs, which is basically South Australia. So you've heard of Moomba. We got Darwin and offshore Northern Australia. And of course, Western Australia, which we see good opportunities for there. And Brett will probably talk a little bit more about that, but we've got a real competition going on between the upstream and the midstream and what to do with our Reindeer and Devil Creek facilities. Because when Reindeer comes to end of its field life, the upstream guys want to backfill it, the midstream guys want to turn into a CCS project. So I like a bit of competition between the 2 divisions there. And one of the things that makes this really exciting for us is you think in transition times, this means a lot of jobs for people in our industry. But if I think of a subsurface community in our organization, it's new opportunities, it's different challenges. It's now finding the right reservoirs to be storage locations in the right geology that we can use to store securely, permanently for the long term. And there's a neat symmetry to using reservoirs that stored hydrocarbons for 80 million years or so securely to put CO2 back into, put greenhouse gases back into. I like the symmetry of that story and that strategy. But you can see there's 3 big hubs here. We're looking at these opportunities. Recently, we've been bidding on new acreage around these assets to get more storage capacity as well to build that inventory. So for our subsurface guys that were used to going out trying to find reservoirs that we could produce hydrocarbons from, they have now actually got activities where they're looking to find reservoirs where we can store hydrocarbons in. And there's all sorts of jokes that drillers make, but that will be good because they're good at finding rent to reservoirs and all of that sort of stuff over the years. I'm not going to go there. I'm not going to touch on that. Some companies are better that than others, right? But that's a really exciting space for us to play in. We feel we've got some real natural advantages. When you look at the cost structure around Moomba CCS, it's clearly the lowest cost carbon capture and storage project in the world. I was recently in Houston talking about this project and over in Paris at the IEA talking about this project, and people are stunned at the cost we can do this for, stunned at the cost we can do this. Half the cost of other projects around the world, and that's a real competitive advantage that we can leverage off for other things, like some of the clean fuel opportunities we have on the back of that. Our Carbon Solutions group that are charged with finding new technologies like direct air capture that Brett will talk about later today as well; and PCC, which is post-combustion capture, to capture even more emissions to put in the ground to generate more credits that we can sell to create new revenue streams. And nature-based solutions. Santos owns more than 1 million acres of land in Australia, and we have got relationships with more than 2,500 landholders in Australia and PNG. And so by building the capacity and the capability in our organization to work with all of those stakeholders and work across our own land portfolio to identify nature-based opportunities to create more offsets and more credits for this business is something we're very excited about as well. And then there's the clean fuel hubs. And if you want to think of the CapEx flows here, it's really about energy efficiency projects in the short term as well as CCS projects in the short to midterm. And as you get into the second half of this decade, leveraging off the back of those CCS hubs is starting to build those clean fuels projects. So it's hydrogen, ammonia type projects that we think will be the clean fuel projects of the future as the market gets ready to take it. And we're talking to all the customers out there today. We know when they want to take this stuff, when they expect that transition to kick in. And we are looking at this plan lining up with that, and you can see the timing of the major milestones on the plan. And I think the key thing to recognize here is this is a plan. The plan will change. Dates will come forward. dates will go back as these things mature. But we will be measuring against that and reporting back to all of our stakeholders on an annual basis to make sure that it's clear how we are measuring ourselves and progressing against this plan to deliver on our targets and our commitments. And how are we going to do that? Well, typically, our organization has been set up, and we have a very traditional exploration, development, production and marketing-type structure for our conventional business. And you can see what we're building from -- to 2022 onwards as a business that focuses on 3 key divisions across the organization, namely, being our upstream business, which continues certainly with D, P and M. Maybe a little bit less of the E. The E is more going to be the near field focus around our infrastructure for backfill and maintaining supply, less of the big well cut E&P-type activities because we don't see the need to do that. There's a lot of gas that's been discovered around our assets today that we can tap into. Our midstream and clean fuels that we've talked about, which is really focused on the infrastructure, no revenue from the sale of hydrocarbons. The revenue comes from tolls and tariffs and of course, from new products like carbon credits and/or clean fuels in the future. And then the low carbon solutions I talked about, focused on nature-based offsets and carbon reduction technologies and the application of existing technologies and new areas. That's how we're setting our organization up to go forward, how it's supported by our central functions across organization and that matrix-type structure that we're all very used to in Santos. And that's what we believe is the right structure to drive our business forward and the right focus through the business between now and 2030. So in that, I think that concludes my section, and I'm going to hand on to Jane now to take you through some of the analysis of our portfolio, the macro environment and hopefully demonstrate to you how robust and resilient the business is for the challenges we have ahead. Thank you. Over to you, Jane.

Thanks, Kevin. Good morning, everyone. I'm Jane Norman, Vice President of Strategy at Santos. And today, I'm pleased to highlight the importance of gas in providing secure, reliable, affordable and lower emission energy through the transition. I'd also like to set out Santos' scenario modeling and the role CCS has to play in the world's climate objectives as well as Santos' own energy transition plans. Today, gas -- global gas demand continues to grow while supply is constrained, resulting in prices reaching an all-time high. We are witnessing the impacts of global political unrest, underinvestment in new supply. And this underinvestment is a direct result of the pandemic, along with government policies and activism which have impacted access to resources and access to capital. Gas prices in Asia and Europe have increased more than 300% in the past 12 months. High natural gas prices have resulted in fuel substitution in electricity markets in favor of coal and oil, leading to higher carbon emissions and air pollution. In the U.K., the energy regulator has just increased the energy price cap by 54% to nearly GBP 2,000 a year per household for 22 million customers. It's expected that this increase will push 1/4 of British households into what's called fuel poverty, and this is defined as a household spending more than 10% of its disposable income on its energy bills. And the most scary bit of that statistic is that is before the price increases from the Russian-Ukraine conflict have been pushed through. The world continues to rely on hydrocarbons for around 80% of its primary energy, and this is expected to remain the case for decades. Therefore, making fuels affordable, reliable and progressively cleaner is what we must do to meet climate goals. As the U.S. Energy Secretary, Jennifer Granholm, said last week at the IEA ministers meeting, where Kevin was, "It's not a binary choice. We must both increase reliable supply right now and accelerate our efforts for clean fuels." Turning to LNG. 2021 brought global energy supply security into the spotlight with higher fuel prices, a supply crunch in the wake of the low investment since 2015, exacerbated by the demand crisis during the pandemic. With global's fuel markets and supply chains increasingly integrated, today's energy prices puts a fragile global economic recovery at risk, and it perpetuates energy poverty in the world's most vulnerable. Unlike the energy crisis in the 70s, which was oil-related, today's energy security crisis is centered on natural gas with robust demand for both pipeline gas and LNG causing record high prices. Historical underinvestment and project delays will continue in LNG through to 2025, and we don't expect new supply to come on until 2026. Add to that the uncertainty created by the Russian situation, where they have 30 million tonnes of LNG in operations today and 33 million tonnes under construction. As a result of the Ukraine invasion, the EU have announced plans to cut Russian gas supply by 2/3 this year. Last year, Europe imported the equivalent of 120 million tonnes of LNG from Russia's pipeline gas. This is in addition to the 80 million tonnes of LNG Russia imported last year. In Japan and Korea, energy security concerns are amplified today as LNG is redirected into these higher European markets. The EU Commission and Korea have recently recognized gas in their taxonomies as sustainable fuels. Signaling gas is expected to play a long-term role in the energy mix. More investment is needed to ensure gas supply can keep pace with this growing demand. Natural gas is a critical fuel for industry with more than half of gas being sold into sectors other than power generation. Natural gas has lower emissions in long-distance transport and heavy industry, which are hard to electrify. Natural gas will remain a critical feedstock for manufacturing industries, including fertilizers, everyday products such as packaging, clothing fibers and the gloves, masks, gowns, face shields, hand sanitizers and medical devices, which have been so vital during the pandemic. These charts show gas demand presented in 2 scenarios from the IEA. On the left is the stated policy scenario steps. This reflects commitments countries have made and chose natural gas demand continuing to grow through to 2050. On the right is a Sustainable Development Scenario, SDS, which reflects ambitious aspirational goals to limit temperature change to less than 2 degrees whilst meeting the UN's sustainable development goals for affordable and clean energy. Natural gas demand, along with total energy demand, shrinks in this scenario, and significant CCS is required to remove carbon emissions. The world has an insatiable demand for energy because it fuels human development, improves living standards and economic prosperity. Almost 2 billion people or 25% of the world's population still lives in poverty, an income of less than USD 3.20 a day. Over 750 million people have no access to electricity and another 1 billion people have access to unreliable electricity. This energy poverty reduces opportunities and adversely affects human health. More than 40% of the world's people still rely on polluting and unhealthy fuels for cooking, and the World Health Organization estimates around 7 million people die each year from premature deaths relating to air pollution. This is why Santos sees a long-term role for natural gas and why we're focused on decarbonizing our natural gas supply. We must ensure a just transition ensuring energy security, reliability and affordability as well as lower emissions. Turning to Santos' scenario analysis. This work shows that our portfolio is resilient and sustainable through the energy transition. Our combination of long-life, low-cost natural gas assets, CCS projects and clean fuels opportunities positions us to deliver ongoing value for shareholders across a wide range of macroeconomic environments. In all the modeled scenarios, Santos achieves its 2030 emission reduction target and net zero by 2040. It can be seen here in the step scenario, we have a 35% increase in value compared to the benchmark portfolio case. In both 1.5-degree scenarios, carbon is the key commodity with nominal prices reaching USD 300 a tonne by 2040. In all scenarios, Santos' Upstream business remains cash generative whilst we generate new revenues from pursuing value-accretive CCS and clean fuels opportunities. What we do know is that companies who can successfully navigate the transition have the potential to trade at higher share price multiples as they're lower risk. We are confident that our climate action transition plan derisks our portfolio by unlocking new revenue from natural gas, which is lower emission, carbon credit generation and clean fuels opportunities, and this will ensure our business remains sustainable in all these scenarios. Carbon capture and storage has a huge role to play, and Kevin described this earlier. It's a critical technology to meet the goals of the Paris Agreement as it can provide low-cost and large-scale emission reduction. Today, there are 27 operational CCS projects worldwide that are delivering 36 million tonnes of emission reduction each year. This is a drop in the ocean compared to the 900 million tonnes of CCS capacity required by 2030 to meet the Sustainable Development Scenario. That's shown in the left-hand chart. The chart on the right shows the IEA forecast for CCS capacity by 2050 in order to meet the Paris targets, and these forecasts have been revised year-on-year as CCS is increasingly seen as the opportunity to reduce emissions at scale. The world can't simply switch off fossil fuels. So the shift must be decarbonization, not defossilization. CCS provides a way to reduce emissions from existing assets and from the hard-to-abate sectors. Fatih Birol, the IEA's Executive Director, has stated that reaching net zero goals without CCS will be almost impossible. CCS technologies contribute to clean energy transition in several ways. Tackling emissions from existing energy infrastructure, CCS can be retrofitted to existing power and industrial plants. CCS is a solution for heavy industry, which accounts for almost 20% of global emissions today. CCS is the most cost-effective approach to reduce emissions in iron, steel and chemical manufacturing. CCS is a cost-effective pathway for producing clean hydrogen to meet demand from new applications in technology, industry and buildings. CCS can remove carbon from the atmosphere when paired with technologies such as direct air capture and post-combustion capture. We see CCS as a huge opportunity for Santos. We can redeploy our infrastructure and depleted reservoirs to decarbonize our own products and offer solutions to third parties. In terms of enabler in Santos portfolio, we believe we have a competitive advantage in CCS. It will enable Santos' energy transition through creating new revenue. We have a 3 CCS hub strategy, which Brett will talk about shortly. These are projects in the Cooper Basin, Northern Australia and Western Australia. These CCS hubs could create more than 30 million tonnes of carbon storage a year with line of sight to 10 million tonnes online by 2030. Santos is experienced in natural gas injection for storage and enhanced production, which gives us confidence we can safely inject and permanently store CO2, and Brett will step you through this shortly. Santos will use CCS technology to reduce our own emissions; offer third-party carbon storage services; deploy new technologies such as direct air capture, post-combustion capture and when the market is ready to generate clean fuels. So on that note, I'll hand over to Brett Darley, who's going to talk us through the Upstream business.

Thanks, Jane. All right. Good morning, everyone. I'm Brett Darley. So I'm responsible for the Upstream oil and gas division in Santos, and I'm going to talk just to a couple of slides. So very quickly, I'm a simple person. We've got a simple plan: generate strong free cash flows year-on-year. That's absolutely imperative. We're going to do that through low-cost development around our infrastructure, keep the facilities full. We're going to grow where we can in a disciplined manner, and that's where we have an advantage, again, around our infrastructure, and I'll talk a little bit more to that, and reduce our carbon emissions. I'm going to talk a little bit about the overview. I'm going to talk a little bit about what we're doing in each asset. And I'm going to show you how we're going to date in the last slide. So quickly on the first one, you can see very diverse portfolio here. But if you look at all of these assets, we've been in these assets, Santos as a company or the companies that are legacy to Santos over the last few years, for decades. So we have a natural advantage. We've invested a lot of money in this infrastructure over the years. We've got a deep understanding of the basins that we operate in, whether that be subsurface, whether it be the equipment we operate with. And we've got a deep relationship with communities and with stakeholders and customers in these areas. That is our advantage. So a very, very long history of investment, equipment here, privileged positions that you wouldn't or couldn't afford to build now, and we're going to take advantage of those things as we go through. So we might jump to the next slide. I'll just take it that people understand our assets, but it is diverse. We've got a diverse range of products, a long history, deep understanding and good relationships with people in the areas we work in. So if I just talk through the simple steps. We're going to backfill the assets, keep generating that cash flow year-on-year. That's absolutely imperative, and we've got a plan for each one of our assets to do that. So in the Cooper, it's about low-cost development. We've been doing it for 50 years, large resource. It's about converting that resource to reserves. We've been doing it for 50 years. We'll continue to do it, and we've got a plan to do that. From a growth perspective, if we want to grow in the Cooper, we need to unlock further resource plays, and we're currently doing that through the Granite Wash and deep resource plays that we're executing this year and trying to understand how that fits into our growth. And decarbonization. This is one of our highest CO2-emitting assets, and there's been a lot of work done, all value-accretive operational efficiencies to rationalize equipment, to electrify. And we've got an electrification program coming up. We've got a lot of field compression that if we can electrify, we can make sure that we're not producing that CO2 and we're actually generating electricity in a central location at Moomba, and we're reducing our emissions that way. Also, and Brett will talk to this in a minute, Moomba CCS has the ability to completely transform the Cooper Basin. All of our CO2 reservoir gas aggregated back at Moomba and becoming the first customer in Moomba CCS. So for Moomba -- and sorry, for the Cooper, a great plan going forward. Queensland and New South Wales, again, low-cost development in areas that we've been developing now for a long time or at least for the last 10 years, and we've got good expertise there. And every year, I'm always encouraged just how we're getting the cost down and how we're getting more gas out of those facilities and out of those fields year-on-year, and that's the plan. We're going to continue to do that. From the growth side into the East Coast domestic gas market, Narrabri. So Narrabri have been talked about, but we have a plan that I believe it's Narrabri's time, and that could provide some substantial new gas into the East Coast domestic gas market. On our emissions reductions, for -- it is a low CO2 asset, but we are continuing to drive carbon emissions down through electrification and where we buy electricity through, I would say, working with our providers to go renewable and that will drive our scope 2 down. In WA, you would have seen the announcement about the Bedout discovery we had at Pavo. So the Bedout for us is an incredibly exciting basin, and so it's not just a field. This is an entire basin. We have 70% to 80% of that basin, over 7 million acres of permits up there, and we're continuing to have success up there. It's very exciting. And not just from a liquids point of view, but we see the Bedout as the backfill for Varanus Island. So where we've been developing around the Carnarvon, our traditional stomping ground, small accumulations, tough work, but profitable. We believe the potential here in the Bedout to backfill VI out past 2040 is really, really strong. And we're continuing just to be excited by the Bedout. On top of that, the base Dorado project now has a tieback. So Pavo can be tied back to -- and we can increase the reserve size of that project before we've even FID-ed it, so it's a fantastic place to be. WA, a traditional asset, where we provide, at the moment, 40% to 45% of the customers in that domestic gas market, a very large domestic gas market with big users. Again, relationships. So we have strong relationships. People want to do business with us, and we want to continue to provide gas to the WA domestic gas market. It is a low CO2 asset. But again, we have been looking at -- and we have implemented, and I'll show you how we've been going operational efficiencies, plant modifications, rationalizations of equipment to drive down emissions. Northern Australia and Timor-Leste. So we have Bayu-Undan tailing off right now as we expected. We've had -- we've been able to get a little bit extra light through the infill program out of that and make -- take advantage of the high gas prices or the high LNG prices at the moment. So that's great. We're out there working hard to try and maintain production out there as long as possible. All these cargoes are spot from now on, so it's a great way to make a margin. And we have the Barossa project, which is a backfill project. So it's a new offshore project, but it's backfilling existing LNG facility. Again, totally on strategy. We're about 30% of the way through that project, and first gas is expected around the first half of 2025. That will keep Darwin LNG full past 2040, absolutely full. So if we find any more gas, Brett is going to have to build as another LNG facility beside that one. What we've done, Barossa, again, is another high emissions, high CO2-emitting asset. So what we have done is make sure that we are ready to export that gas back to the beach. Regional design was gas [indiscernible] -- CO2 [ meted ] offshore. We've changed that. We can bring the gas back to the beach. And ultimately, solutions like Bayu-Undan CCS or even Petrel sub-basin, which we're looking at as well, provide huge opportunity to decarbonize Barossa. And in PNG, very strong backfill program into PNG LNG. Again, line of sight past 2040 for PNG LNG through a number of things. Angore will be the first cab off the rank. Our own associated gas from our operated position in PNG as well. So ultimately, Santos' gas into PNG LNG is over the field-of-life or over-the-facilities-projects life is about 20%. In the next few years, we will ramp up our gas production to 25% of the deliverability that goes into PNG LNG out of Santos-operated assets on top of what Exxon is providing. So we are basically transitioning from an oil to a gas producer in PNG. Papua LNG is very exciting as well. So great growth opportunity there. And lucky enough that this is a very low CO2 asset, but that hasn't stopped us at looking at how we can potentially have nature-based offsets. And for Papua LNG, maybe a CCS opportunity there as well. So if we jump to the next one, please. So how are we doing? Free cash flows, this is for 2022. So if we average $100 a barrel over 2022, we will produce nearly USD 3.4 billion of free cash flow. That's what we're here to do. Free cash flow, low-cost development, disciplined growth, decarbonize and reduce emissions. On the emission side of things, you can see this is without CCS, all value-accretive operational efficiency projects that have been implemented by Chad and his team, who's sitting here today, helping the divisions 20% reduction over the last 5 years. These are value-accretive operational efficiencies, no CCS, 20% reduction, well on our way to a 40% reduction target. So yes, very excited about what we've got here. Simple plan, maximize our cash flows, keep our facilities full, grow in a disciplined manner and reduce our emissions. That's all. It's simple. All right. So thanks very much.

Thanks, Brett. I'm the other Brett, Brett Woods. I look after our midstream and clean fuels infrastructure part of the business. I can control this. As previously highlighted, Santos is establishing 3 clean fuels hubs: one in the North, Northern Australia and Timor-Leste; one in the East centered around the Cooper Basin; and one in the West, obviously, in the northwest of Western Australia. They are centered around our existing processing facilities, ones that we've operated for many, many years. The purpose of these 3 hubs is to generate revenue through 3 key areas. Firstly, we process and upgrade hydrocarbons on behalf of our upstream and third-party joint ventures, generating revenues through midstream tolls and tariffs and improving margins through delivering efficiency and lower cost. These revenues are predictable and sustainable and mark the kind of the core of the existing midstream infrastructure business. We have this privileged low-cost infrastructure part of our business, which has enabled us to grow into the clean fuels and carbon storage parts. So talking about our second key focus area of revenue generation, and Jane and Kevin mentioned this at length as CCS. We're focusing on delivering CCS solutions at each of our clean fuels hubs with the FID of Moomba last year in November, with our FEED entry in Bayu-Undan, Darwin CCS earlier this year, and we're working forward effectively in concept stage in Western Australia to utilize the resource at Reindeer. Reindeer is an interesting opportunity for us because as Brett highlighted, our indigenous CO2 is rather low in Western Australia. But we see Western Australia as a fantastic opportunity given it's one of the largest CO2-emitting regions in Australia to capture third-party CO2 and store it permanently in the offshore reservoirs, where we already have wells, we already have infrastructure pipelines and the ability to store permanently that CO2. Our third potential revenue stream is our clean fuels part of our business. Through the strength of owning infrastructure and connecting through our CCS, this enables development of clean fuels options, including hydrogen and ammonia. The development of clean fuels will be based on clear market signals. Santos is in a fortunate position of having relationships with the key energy customers in Asia and throughout Australia. These customers will be the clean fuels customers of the future. So these relationships are strong and well-established. Santos is engaging deeply with these customers, and we have engagements and agreements effectively with all major players throughout Southeast Asia to work with Santos to deliver line of sight to clean fuel solutions. We will not be deploying a field-of-dreams-type approach to clean fuels. We won't be building it, and they will come. We're looking for clear market signals, deploying our disciplined application of capital to make sure that we can lock mutual significant value for all parties. Critically, I should mention also, Santos is agnostic to the technology we deploy into generating clean fuels. We're looking at generating clean fuels -- clean hydrogen, either from utilizing gas or through large-scale renewable deployment in areas like the Cooper Basin that has significant solar resource and also a significant wind resource, which gives us the optionality to deliver very, very low-cost renewable support to things like electrolysis. So -- and we're working with technology providers on both of those as we advance our understanding of the solutions we want to deploy to generate clean fuels. Recently, midstream and clean fuels have been focused on several key areas. So as Kevin mentioned and Jane, Moomba CCS FID late last year. We're also very focused on electrification and renewable integration through not just the midstream, but also, as Brett highlighted, we're looking at electrifying through to the upstream. We're at the phase at the moment of effectively pre-FEED of our hydrogen work, and we continue to execute that and working with our key technology providers. In Darwin -- wrong slide. In Darwin, we are currently executing our life extension project, so that will be the building blocks for the bringing of the Barossa gas back to Darwin to enable that to produce LNG for the next -- until 2040. We are also working not only with the Darwin LNG joint venture, but we have agreements with the Barossa joint venture and the Bayu-Undan joint venture. We have relationships and agreements with the Timor-Leste authorities and the Australian authorities to work together to bring Bayu -- to make Bayu CCS work. I'm very pleased with the progress of that project. Obviously, it's a challenging project, given the multi-jurisdictions, but we're all working very closely. But that is not the only solution we have in the north for CCS. We're also, as Brett highlighted, working on the Petrel sub-basin as another option for future CO2 storage in that region. In Western Australia, we have executed recently an energy efficiency project. We're doing the concept engineering work on our Reindeer CCS project. And as mentioned before, we're looking with some of the largest industrials in that region about capturing their CO2 and storing that permanently as a service, so not necessarily capturing our own CO2 in that region. In terms of strategic priorities, in a similar time line structure to what Kevin highlighted earlier for the organization, midstream was really established only a few years ago, and the purpose of establishing it was to separate from the upstream to have absolute focus on developing our midstream infrastructure. And I think today's discussion kind of highlights where we're heading in that space. What was initially put together was lowering costs, establishing tolls and tariffs for all of our infrastructure players, and we also looked at how to optimize our broader portfolio. Centralizing maintenance, centralizing engineering has allowed us to pull at significant costs for the business, and we also established in that same period the energy solutions part of our business. Over the current period going up into 2025, we are now looking at deploying our 3-hub strategy. So continuing to apply a lower cost mindset across all those assets. We are on track, and we will deliver in the next few months our 2025 emission reduction targets. And as Kevin highlighted, we've already delivered over 300,000 kilotons -- or 300 kilotons of emissions reduction projects through energy solutions deployment against midstream and upstream assets. Moomba CCS, Bayu-Undan CCS and Reindeer CCS will all either be online or going through FEED during this period. And last year, we announced an arrangement with CSIRO. CSIRO and Santos are working together on both direct air capture and post-combustion capture technologies. They have a unique and world-leading IP in terms of low-cost direct air capture. So we signed agreement last year. We are building the equipment in 2023. We'll be deploying that at Moomba in 2020 -- sorry, 2022, we're building the equipment. We'll be deploying that in 2023 for a 12-month trial to see the efficiency of their technology. That has a target of delivering $70 direct air capture costs, including our carbon capture and storage. A really, really exciting and effectively game-changing cost base compared to direct air capture technologies provided elsewhere. This is establishing the footprint for our future in terms of our clean fuels business. So in the post-2025 period, we're looking at having our 3 direct air -- our 3 CCS projects online. We would have moved forward through FEED and hopefully into FID of large-scale ammonia and hydrogen production. We should be deploying our direct air capture and PCC technologies at Moomba and utilizing our CCS capability to add value, not just with our own products, but also the third parties that we also work with. Kevin mentioned the CTAP. So one of the key focus areas for the business over the last few years and moving forward is effectively operationalizing what we're doing in terms of our emissions reductions. So in terms of operational efficiency, we're really targeting on lowering our scope 1 and scope 2 emissions. And through our midstream infrastructure and our upstream business, we've been able to achieve the 300,000 (sic) [ 300 ] kilotons of emissions reductions. We've done this for just over $100 million, and we have a plan over the next decade to deploy another $400 million to these projects. Each of these projects deliver a return. They're not a cost to the business. They deliver more than a 10% rate of return for each of the projects. So they're all value-accretive for our business. Carbon capture and storage, as I mentioned, Phase 1 of Moomba CCS has been FID-ed. We should have that online early in 2024, and that will store 1.7 million tonnes of CO2 per annum with a significant opportunity to upscale there. Santos, we believe, is the first company globally to announce storage volume. So going through the SRMS, the latest technology in declaring storage volumes, we announced, in line with our Phase 1 Moomba CCS project, 100 million tonnes of storage for that project. So world-leading in that space, but we have significant more volume. And [ Rebecca Jones ], who is here with us from Adelaide, is putting together a team to make sure that we capture and unlock more and more storage capacity, not just through the Cooper Basin but also across Bayu-Undan, the Petrel sub-basin and offshore Western Australia. In terms of our carbon solutions, this really speaks to our direct air capture, speaks to our land-based opportunities. As Kevin mentioned, over 1 million acres of Santos hold assets in terms of land. We're looking at how do we upgrade that land, generate carbon units from that land and improve the biodiversity across those land areas as well. We're working with other landholders within Australia and looking at opportunities in PNG to generate a significant amount of carbon credits from that area. Carbon solutions will also be establishing a trading capability to make sure that once we generate credits, we have an ability to trade them and generate maximum revenue from that. Our clean fuels hubs are really centered around those 3 pieces. We've announced those last year. They are deep in establishment. We're building capability to unlock those. And with Moomba being a critical enabler for our -- probably our Phase I of hydrogen and ultimately ammonia export through those infrastructure pieces. The critical part about that is disciplined capital deployment. And here, just looking at in some detail some of our operational efficiencies, just some projects that we executed so far. We've been working on several of these, including the renewable integration across the Cooper Basin, power optimization in Western Australia with depths outside of Devil Creek, one of our largest solar farms installed at Port Bonython, and we have online and is now delivering more than what was planned through the FID of the Moomba heat recovery steam generator, is deploying technologies like that elsewhere across our portfolio. These things -- these projects don't necessarily cost a lot of money, but they can deliver enormous amounts of efficiency, and they represent part of our journey to our 300 kilotons of emissions reductions per annum. So looking at our 3 clean fuels hubs, this is where they are located in Australia. The east part represents the center in Cooper. That has the ability to store over 20 million tonnes of CO2 per year. Northern Australia through Bayu-Undan, not including the Petrel sub-basin, has the ability to store over 10 million tonnes per annum. And in Western Australia, we have the potential to store over 2 million tonnes. And our goal is to not just store our own, but capture third-party CO2 to integrate direct air capture and others to maximize that. So collectively, that can deliver an enormous amount of carbon credits, whether that be Australian carbon credits or others, to deliver revenues for our business. Santos has a real technical advantage in this space. We've been operating the reservoirs and the facilities there for decades. We have the ability to repurpose existing infrastructure. So in the Cooper Basin, one of the key points of low cost is we have the wells, we have the pipelines, and we have the CO2 extraction facilities already in place to enable a low-cost solution. Collectively, they can enable the hydrogen and ammonia production from gas, but also the integration of renewables enables the hydrogen generation from renewable resources as well. So a little bit more about our competitive advantage, and I'm always a bit surprised that people find that CCS technologies novel or potentially could fail. We've been injecting CO2, we've been injecting gases into reservoirs for decades. We have proven capture technology at Moomba. If you've ever had the opportunity to get there, those very tall towers are effectively our CO2 extraction towers. We've been capturing CO2 or extracting CO2 for sales gas for decades. We're installing new equipment there to compress and dehydrate that CO2 to install permanently in our reservoirs. We have pipelines. We're very experienced in transporting CO2 through our pipelines and very experienced in all the technologies associated with that. And in terms of the picture on the right-hand side, that green wellhead, that was our trial when we injected 100 tonnes of CO2 into one of the reservoirs in the Cooper Basin. So we've got the experience and the capability. We have the footprint, and we have the reservoir understanding to unlock low-cost CCS. And this is just not the Cooper Basin, this is also in Northern Australia. For those of you who may not realize, Bayu-Undan started with several years of gas reinjection at the start. So our understanding of the reservoirs, the ability to take gas out and also the ability to put gas in is really, really well established. A little bit more about the history of us, storage of gases. This has been going on originally from as early as the '40s, pushing gas back in the ground. CO2 has been injected in the Permian Basin well before the start of the '70s, a significant time. We started the Moomba storage project, which is the same reservoir section as what we're storing our Moomba CCS project, the same reservoir beds. So we've done injection in terms of Moomba storage for well over 40 years, and that history has given us an incredible insight to the way that the reservoirs perform and the ultimate storage. And as Kevin mentioned earlier, these reservoirs have held gases in them for tens of millions of years. Once they go into the reservoirs, they'll be permanently stored. We've also tried ethane injection. We've also looked at other forms of injection throughout the Cooper Basin. There's other big projects in the world, including the Sleipner project in Norway, which is a large-scale CCS project. CCS technology isn't a fail technology as some people might get you believe. One of our technical advantages, we're going into depleted reservoirs. We really know the reservoirs where we're storing the gases. There's really very little exposure in terms of uncertainty. And we have the wells and we have the simplicity to be able to push that gas into those reservoirs with very, very little risk. So where we are with Moomba CCS? We took FID in November last year, and I'm proud to say Moomba CCS is the lowest-cost CCS project in the world. Our first injection is inspected in 2024. I'd love to get that a bit faster, but that is where we are targeting at the moment. The breakeven cost is USD 24 a tonne, and we continue to drive that down. We have the existing facilities. So the existing plant effectually captures the CO2. We're going to install a header across wherever we vent the CO2. That will be shipped across to the new compression dehydration facilities, outlined in the circle on the left-hand side of that chart. And that -- we've ordered that equipment. That equipment is being either built or currently in construction overseas, and that will be starting to be installed this year. We drilled the wells. We'll be drilling the wells at the start of the end of this year. So we'll have all the equipment online and in place ready for first injection in 2024, a really, really exciting opportunity, but recognizing this is just Phase 1 of our opportunity at Moomba. We have multiple phases when we can capture more and more CO2. We can take CO2 from direct air capture and post-combustion capture and potentially bring CO2 in from others. We already captured CO2 from third parties, and we install that in the ground. This the ability to scale up our Moomba CO2 capacity, especially given we have 20 million tonnes of storage capacity per year across the Cooper Basin. In terms of where we are with the Bayu-Undan CCS project. Bayu-Undan has the potential to store up to 10 million tonnes per year. And that's just the limitation currently of the pipeline that goes from Darwin LNG to Bayu-Undan. It's not a limitation of the reservoir, so to speak. We have -- again, we have the CO2 extraction facilities. We have pipeline and we have wells. So it helps us drive a low-cost outcome for Bayu-Undan. We are targeting FID in the middle of this decade, and that gives us the ability to repurpose the facilities at Bayu-Undan and saves or defer a significant amount of rehabilitation costs associated with those facilities. We're working with all the partners in the region, whether that be the Darwin partners or the Bayu-Undan partners and in the governments in Timor-Leste. But we're also looking -- working with all the adjacent infrastructure owners, who currently are venting their CO2 in that region. We think that this opportunity is -- it gives us the opportunity to be the original hub of CO2, and we can abate not just our own, but other parties' CO2 in that region, giving Santos and our joint ventures a technical advantage in this space. The Petrel sub-basin also offers a significant opportunity, and that is on the way to Bayu-Undan. So if and when the Bayu-Undan facility is full, we can always come back and fill the Petrel sub-basin, which is another great opportunity for us, and we'll be looking at that in more and more detail over the next few years. So one of the things that I really want people to take away from today is our cost focus on our opportunities. The chart on the left-hand side is a carbon abatement cost curve. This is one of the images brought out of the recent Goldman Sachs research note. You look on the left-hand side in terms of those negative numbers, they have projects like what we executed in Energy Solutions, i.e., they deliver significant rates of return. But there's only a few -- a small amount of those projects globally that people can invest in. And then we start looking at projects that require some form of carbon price to help facilitate, and you can see Moomba CCS sits there at the very, very low end of the cost abatement curve. And in fact, when you look at our estimates of where we are with Northern Australia and direct air capture, we're sitting at the very, very low end of our carbon cost abatement curve, giving Santos a significant technical advantage to enable value and deliver revenues from our infrastructure position. On the right-hand side, you'll see the carbon price forecast from the multiple IEA steps, SDS, 1.5 degrees and even IHS' model. That indicates where people think the carbon price will be in the future. So if you just -- you could take your eyes and look across from where direct air capture is and where it intersects the charts on the right to give you a sense of what the time line for having commercial direct air capture deployed across our businesses. Now we're looking at, I think, in particular, the direct air capture offers a fantastic opportunity for the Cooper Basin, where we can deploy low-cost renewables alongside our existing infrastructure and now scaling up our CO2 storage or our CCS facilities to facilitate a large-scale direct air capture opportunity. But we're not just stopping with our own direct air capture technology, the one we're working with CSIRO. We're effectively running a competition in the Cooper Basin, bringing -- the Cooper Basin is really open for business. We're working with several third parties about bringing their direct air capture technologies to trail on the Cooper Basin, so we can look through and see what is the most competitive cost and competitive and technology projects that we can deploy. This is a really exciting opportunity for Santos and a really exciting opportunity for the Cooper Basin. And what that does is gives us line of sight to what is the best technology and how we can drive that cost point to the lowest possible point and gives us a line of sight to being able to fill our 20 million tonnes of capacity per annum. Why we are so attractive is because we sit so low -- so far down on the cost curve. Once the original -- the initial capital is installed for Moomba CCS, the ongoing operating cost of Moomba CCS is only between USD 6 and USD 8 a tonne. So it's a very, very low operating cost. So once initial capital, i.e., the compression of dehydrations installed, the ongoing cost of operation is relatively low, which gives a very, very exciting opportunity for all third parties who have the technologies that can deploy in this region. And where does that lead us to? Deployment of -- enablement of CCS gives us the ability to enable hydrogen. And the chart on the right is effectively your typical cost improvement curve that you see through hydrogen, where the hydrogen from gas is effectively between USD 1 and USD 2 per kilogram. Our estimates previously highlighted to you suggest that we can deliver hydrogen around Cooper for around that AUD 2 a tonne level. We're still working on those numbers, but that's -- that's a very, very -- that is effectively the Australian government target for hydrogen cost. But notwithstanding, I'm not focused only on hydrogen from gas, clean hydrogen through CCS, I'm also focused on the ability to deploy renewables, and there is lots of technologies that have been worked on the moment. We've recently analyzed the wind flow across the Cooper Basin. The Cooper Basin offers a really strong wind resource as well as a very strong solar resource. So deployment of low-cost renewables. And effectively, a very low mineralogy abundant water source across the Cooper Basin gives us some significant advantages for enabling hydrogen production out there. So people must say, "Why are you doing hydrogen in the middle of the country?" Well, we are connected to all the rest of the country through pipelines, pipelines that can handle CO2. Been working with all the pipeline vendors. We've been -- we've got arrangements and technology agreements with all the key technology providers, and they've worked with us to get to a point where we understand deeply the technical challenges associated with hydrogen. So whether it's hydrogen born out of gas with CCS or hydrogen born out of renewables, we're looking at both to deliver the best possible outcome. And finally, Kevin mentioned before, our carbon solutions. Carbon solutions is about delivering CCS expansion opportunities. It's about unlocking direct air capture, and I mentioned before, our competition. We're going to be running across the Cooper Basin with third-party director air capture technologies. It's about building our carbon offsets portfolio, utilizing our own land, working with other parties, working with our landholders to utilize their lands and even capturing new projects, whether that be in Australia or in Papua New Guinea or other regions where we can unlock significant carbon credits. New technologies such as post-combustion capture are also very, very critical. Post-combustion capture is about catching the concentrated stream of emissions associated with burning gas or fossil fuels, capturing those emissions in terms of CO2 and then permanently storing them. Those concentrated emissions should be a good application of similar technologies what we apply in direct air capture, using similar media. And we're looking at -- we've got great infrastructure to help build that and help deliver that through our infrastructure position. Carbon solutions will also be working on our ability to trade carbon. So managing our carbon and the government policy associated with carbon is also building effectively a trading desk as our carbon credits build over time. So that's, in short, the key focus areas of our midstream and clean fuels, is to deliver revenues, focus on delivering lower cost revenues from our existing footprint in terms of our infrastructure through tolls and tariffs, delivering revenues through generating carbon credits through CCS and delivering ultimately revenues through clean fuels, whether that be through pure hydrogen or ammonia or other clean fuels options that we're currently looking at. And I'll pass it back to Kevin.

Okay. So thanks to Brett and Brett, and you can see that I minimize the chance not remembering who is on the management team by getting as many people with the same name as I possibly can. Makes life really easy. It also means when you shout Brett, 2 people jump, which is pretty neat. And Jane as well, thank you for your presentations and taking us through it all. Just to sort of wrap up. As I said at the beginning, we're going to share with you and hopefully you got a sense for that we do have a very comprehensive climate transition strategy, and coming off the back of that, a detailed transition planning. You saw through Brett Woods' presentation how our midstream and clean fuels division are operationalizing that plan, turning them into real projects and driving real progress across those projects to take us towards those targets, achieving those targets. And you heard how we delivered some of the targets early, 2 or 3 years earlier than the target aspiration that we set at the time. We talked about how we want to create new revenue streams by the generation of carbon credits and the number of avenues, a number of different types of projects that we're going to invest in and we're going to drive forward to create those credits. And we see that as a very, very valuable -- well, I would say you may see that as a very valuable new revenue stream depending on your view on what carbon prices are going to do in the future. We've got a view that they're going to be stronger. This is only going one way, and that's why we are driving to do this and be an early mover in this transition. And of course, we want to create new revenue streams from the clean fuels themselves that we can leverage off these infrastructure hubs and create new or develop new clean fuels like hydrogen, like ammonia and other sustainable fuels in the future from our infrastructure so that we can create those new revenue streams as well. I hope you got a sense that just as we have over the last 5, 6 years, we're going to do this in a very disciplined manner. As I say, the transition has to be market-led. Suppliers cannot tell people what fuels to use. It's the market that will lead to transition ultimately. And we're encouraging and working, you heard from Brett, with all of the players in this region. I've said it many times. The LNG buyers today are the hydrogen buyers tomorrow largely, and so it's when they want to move or can move or see the opportunity to move and transition for themselves that we will be ready to respond. We will be ready to respond. We've identified the projects. We're working with all of those stakeholders and partners to have them involved in those projects as well. So we're going to do it in a very disciplined manner. And of course, throughout all that, you heard from Brett Darley, we've got a really good portfolio of core assets so that we can continue, even though we're decarbonizing and spending money to decarbonize those assets, we can continue supplying affordable and reliable fuels today to our core customers to keep supplying into those markets whilst the demand remains very strong. You saw from Jane's charts, the demand is very, very strong for decades to come. So on that, I'm going to wrap up the presentations. I think we're slightly ahead of schedule, which I'm really pleased about. And it's not very often I ever get accused of being ahead of schedule, so I'm going to take that, and we're going to open up for questions. I'm sure that there are a number of questions.

Kevin, Mark Samter from MST. Just a question. I mean, I think when you talk about the breakevens for some of these projects, I'm pretty sure you guys just use NPV terms because it's industry standard. The reality is, there's a cost of capital arbitrage in these things. Can you talk us about in the real world when you're looking to fund these projects what the difference in the cost of capital is for you versus a traditional project?

Well, look, I mean, I think that can be quite -- there's a market difference or I mean quite a significant difference from these projects versus the historical projects that we know there's a higher cost of capital for today. In terms of quantifying that, I think we have to see how that plays out. But we're talking about very significant cost of capital advantages for these types of projects. And so in that sense, they are lower-cost, higher-value projects. And depending on your view on carbon pricing, if you take any of these scenarios we shared with you today, and I apologize, we're just using the IEA scenarios to forecast carbon prices because not a lot of people do that yet, right? But I think any sort of a carbon price assumption to use, and we've got our own internal ones, which are very conservative compared to what you saw there today, you're talking about very high rate-of-return projects. In fact, the Moomba CCS project based on our internal carbon prices, which are very conservative, is that -- have we ever stated what that is publicly so I can say it? Good. So we assume carbon as USD 50 by 2030, right? So if you take a straight line from the sort of ACCU price today around AUD 20 up to AUD 50 by 2030, we're talking more than 20% IRR for the Moomba Phase 1 project, for the Phase 1 project. So we have very high IRR projects. And you're right, I was [ saddened ] when Brett said it's a life cycle breakeven of $0.24, [ see NPV 10 ], CNP. It's not a true breakeven. That's a 10% return built into that number, right? And so it doesn't take much increase in carbon price to really drive value in these projects. And that's why expansion of that project becomes very lucrative. So once you've got the base infrastructure in place, expanding the CCS projects becomes very lucrative. And in fact, the challenge for Moomba is not doing this. This is proven technology. We've been doing it for decades. It's getting enough CO2. We can make a contribution to Australia's emissions reduction, a very significant contribution. We can take 20 million tonnes of CO2 a year if we had it, right, which is why we're looking at new technologies like direct air capture because if we can make this work, it's lucrative. And we're not alone in this. There's other companies doing this. We've got a very close working relationship with a U.S. company, Occidental. And we share a lot of technology and technical support between the 2 companies, and they've been part or part of the technical resource we've been working with developing the Moomba project. And you probably saw recently a very famous investor to get a sizable stake in that company because one of the things that they are driving forward on is direct air capture as well. They see that opportunity over there. So Cooper Basin is unique because it's got more capacity than we need, an abundance, and is a very low-cost CC opportunity. So if we can crack the code here, this becomes extremely valuable and gives us credit and offset generation way beyond our emissions footprint, way beyond our emissions group. And that's why we're pushing this as hard as we are. Thanks, Mark.

Kevin, James Redfern from Bank of America. Just 2 questions, please. I think Santos' scope 1, 2 emissions are roughly 5 million tonnes per annum. And just in relation to the Moomba CCS project, 1.7 million tonnes per annum, Santos' share is 2/3 of that. So let's call it 1.1. So is the way to think about it that, in 2024, the Moomba CCS project will reduce Santos' emissions by, say, 20%? So 5 million tonnes today reduced by 1.1, so roughly 1/5. Is that how we think about it?

No. Kind of, but not quite. So take the 5 million, and I think we turn it to 5.9 million. Is that right? When we rebaseline back to 2020 because Oil Search is now part of the equation. So when we rebaseline to 2020, the 5 million becomes 5.9 million, and so it will be 1.1 or 5.9 million when this comes online. So I think there's a footnote on the chart that actually shows you the new baseline number because we've never got the Oil Search assets included in that number, yes.

Okay. And then just one more in relation to Barossa. So it's a high CO2 project, as we all know. Can you please maybe tell us what Santos' net CO2 emissions will be from Barossa in, say, 2026 just so we can put that into context? And then also, I guess what are the major hurdles against the 10 million-tonne Moomba -- sorry, sorry, 10 million tonne per annum Bayu-Undan CCS project?

Yes. Okay. If I miss any of that, come back if any points I missed, right? So I think the way to think of that is if we execute the Bayu-Undan CCS project, we're successful in executing that project, that would capture all reservoir emissions from Barossa. So that would be the sort of foundation project going into the Bayu-Undan CCS project, the foundation customers, I should say. And so that would be gross around 2.2 million tonnes per annum. And we are currently 62.5%, but we're in the process of executing a sell down to 50%. So we would be, again, around 1.1 would come from that project as well. In addition to that, some of those smaller projects and expansion projects you heard the guys talk about like electrification in the Cooper Basin gets a chunk of gas that we currently burn on the upstream assets across the Cooper Basin. So today, we'd be burning around 60 terajoules per day for fuel and for power across our upstream assets or across all Cooper Basin. We want to capture at least half of that and bring it back to Moomba. It's much more efficient to generate power from Moomba and run poles and wires and electrify all of that upstream compression. And what that allows us to do then is capture the emissions from those operations where today we can't because we're burning that gas in all the upstream satellites. And so we capture the emissions from that. And I think that gives us another 0.3 million, 5.4 million tonnes per annum there. And there's lots of little add-ons like that, that as well across the portfolios. And then, of course, with Bayu-Undan CCS, if that comes online, you get the additional third party or any expansion of Darwin that we execute in the years ahead. Because what's really interesting about Bayu-Undan is that there's a few of these third-party-type hubs being developed around the world. You probably -- Northern Lights in the North Sea, another one has been announced up there. This is the biggest one in the world, and it's certainly the biggest one in the region, obviously, because there's regions in the world. But the beauty of this one is there's a lot of locked resource in the region or trapped resource in the region that can potentially unlock, and that's quite exciting in itself as well. Other people's projects, other assets. And I've said before, Darwin's open for business. If people have resources in the region they want to develop and they can do it sustainably and it's economic, we are open for business, and this makes Darwin even more attractive as a processing facility because we can capture all their emissions. And I didn't touch on Western Australia. Western Australia is a very easy project to execute because we have the pipeline connected to the reservoir. And so when Reindeer comes to the end of its field life, it's a case of plugging in, just plugging in and taking it offshore. So that's actually quite a low-cost project as well because we're utilizing -- if we do that project, we'd be utilizing the existing infrastructure. I think I covered all points in that one. Anyone else?

Mark Wiseman from Macquarie. I just had a couple of questions. One, just on the carbon outlook and the ACCU accreditation. Obviously, Moomba CCS, you've achieved that accreditation. Do you expect WA and -- yes, how will Bayu-Undan work from a carbon credit perspective? And I also wondered if you could just comment on the collapse in prices recently, the government tinkering with some of the policy. Do you need to see those futures start to lift up to an economic level before you start to invest in these additional CCS assets?

All right. Well, I think, Mark, no. I mean, I think that tinkering, as you referred to it, has had an impact on the market in the short term. I don't think that's going to have a long-term impact. I think, ultimately, carbon prices are heading on a, in my view anyway, a fairly consistent trajectory. I don't think that's going to change. So to me, just as a bump and go a new credit now, but it will still continue to grow over time because there's undoubtedly a shortage. If you look at the charts Jane showed you, the steps, the stated energy policies of all the governments worldwide, it's clear that if the governments are doing what they say they're going to do, which is the policies, they are consuming more and more energy every year, and it's driving hydrocarbon use-up. Now that means emissions are going to go up. unless we do something else. So the demand for offsets, for credits, for carbon capture, I believe, is going to continue to grow for some time to come. I guess I cannot see the circuit breaker. And that despite what we all want it to be, the reality is what we're seeing play out globally. So that will drive carbon prices up, in my view. So that's that part of it. In terms of the methodologies. Yes, we've got the methodologies approved now in Australia for CCS projects to qualify for the generation of Australian Carbon Credit Units. So any project we do onshore, that qualification will be consistent with that methodology. So I'm very confident in any of those projects in Australia would qualify for carbon credits. In Timor-Leste, that's a bit different because that's not in the Australian jurisdiction. So we may or we may not try to get them to qualify for Australian carbon credits. We might go for some other gold standard type of credit, international credits that might get us exposure to higher priced markets. And it's too early to say what that will be. I mean we've got commercial people look into that. That's what the carbon solutions group, it's one of the roles of that group. We're building that capacity and capability. But ultimately, we'd look at all markets to get the best prices for those projects. As I'm sure the regulator, the ANPM, would want us to do is get the best value outcome for the project.

Just another question on customers for the hydrogen and ammonia product. One of the challenges with the LNG business model historically has been the legacy oil linkage and the volatility in oil. What are customers wanting when you talk about long-term contracting for ammonia in North Asia, for example? Is it going to be a fixed price model? Or do you think it will be linked to traditional fuels?

Well, look, I mean, I think, today, there is an ammonia price. There is an ammonia price so you can go in and find that price today. Will that change? Will it be linked to -- I think when it starts to be used for energy, I suspect there'll be a drive for that linkage. I don't suspect, I know those conversations are happening today. Because they're replacing something that's easily measurable and easily sort of forecast -- or not easily forecast, but it's understandable on how to forecast it. And so I suspect that when you're selling ammonia or hydrogen in the future for power generation for energy, then they're going to want those same sort of indexations or something similar to that in terms of how they price that to give them a -- so they can take a view when they're doing the long-term economic assumptions and valuations on those contracts. Now that may change over time. I mean we've seen a real delinkage between LNG prices recently, spot prices and of course, oil. I mean quite an incredible separation in the short term, and I'm not sure how that's going to play out. We're watching that very closely. And whether ammonia would then go to a new gas indexation type pricing or be oil linked, I think, is too soon to tell. But all of those conversations are happening, and that is part of the complications of switching to new fuels, right, as they've got to establish themselves. What I do think will happen, though, is that the carbon footprint of the source will matter. And whether that's in premiums or discounts to whatever that index price is, I think projects that can deliver gas LNG that come from a low scope 1 and 2 process or feedstock will price better than projects that don't. I'm very confident of that in the years ahead. And likewise, if you're then supplying clean fuels, those same tests will apply to those clean fuels. So CCS, in my view, no matter how I look at it, becomes a critical technology and a game changer for Santos.

We got questions from the web.

All right. Andrew, do you want to read them out?

Okay. Yes, a couple of questions from the webcast.

I'll rely on you to filter the hard ones.

The first question is from Adam Martin at Morgan Stanley. And Adam asks, can you talk through some of the external CCS opportunities for Moomba, i.e., taking other companies' CO2 and using your technology and reservoirs to store it? And do you think it is feasible to transport CO2 by pipeline to get it to Moomba?

Do I think it's feasible? Yes, but it's expensive, right? So it's expensive. And when we have looked at it in the past, it's anywhere from AUD 100 to AUD 150 per tonne depending on when we've looked at it in the past from. It comes down to scale, though. If you double the size of the pipeline, double the size of the resource, then that carbon price breakeven drops quite considerably. So it depends if you're talking about a pipeline that's taken a million tonnes per annum versus one that's taking 10 million tonnes per annum, that's got a very significant cost difference, cost of supply for the feedstock. So the answer is yes, it is feasible. And that would take industries and government working together to put the -- I don't know why I keep looking at you, Andrew, because you didn't ask the question. So I should be looking at the screen. But that would take governments, companies all working together to be underpinned and underwrite that sort of investment. And so the answer is yes. And I think I read and the budget the other day that there are funds put aside to study some of those options. So that's interesting that the government is looking at studying some of those options. We're open for business. We've got 20 million tonnes per annum of storage capacity in the Cooper Basin. How they want to bring it to us, whether it's through pipelines or otherwise, we're open for business. That is a business model we want to build. So we are looking to develop those opportunities, but we're also looking at opportunities that avoid the pipeline like direct air capture. And that is a function of 2 things. It's a function of the technology cost of direct air capture coming down, and Brett talked about the CSIRO work we're doing to drive that down. It's actually the capture technology around $50, and we're estimating about $20 for transport and storage. And so about $70 is what we're targeting there, $70, $75, in that range. If we get that to work, then it's just a function of when carbon price gets to $75. When the 2 lanes cross over, it becomes economic. And right now, that looks to us like that would be in the early 2030s. We'll try to drive that forward. If we can drive that forward into this decade, then all bets are off in terms of how big this can be. And so that's one of the technologies we're driving. As Brett talked about, we're running a competition essentially where we're asking technology developers of direct air capture to come and trial their technologies in the Cooper Basin. We will help them establish it in the Cooper Basin. We'll operate it for them. Effectively, they pay us rent run [ the cat ]. And obviously, there's an access to technology that we have as part of that deal. And if we can get it up and running, that can help us get there faster.

Okay. A couple of questions from Nik Burns from Jarden. I'll read the first one. Your CTAP mentions $400 million of planned investment in energy efficiency projects out to 2030. How much of this $400 million is already committed? And what level of emissions reduction is expected to be achieved from this level of investment?

Yes. Well, look, I mean, I'm not going to give you the level of emissions reduction from those projects. There are literally 100 projects that would make up the list that we would estimate we're going to spend that money on. Some of them are quite small. Some of them are larger than others. And are they budgeted? They're in the budget frame is how I would describe it. Our budget is typically a 12-month look-ahead budgets, but we have 10-year budget frames. And so we've identified them. We've scoped them. We've got the cost estimates developed for them. They're not AFE-ed yet, so they're not firm. They're not approved -- they're not all approved. There's a couple -- there's a few for this year in the next 12 months. And we'll just approve those as we go. As we go and as we report back on our progress against the CTAP, what we'll report back to investors on an annual basis is the ones that we've done and how they've gone and what impact they're having. But collectively, we're confident when we take all of these energy efficiency projects, emission reduction projects in that $400 million, when we look at our portfolio of CCS opportunities, collectively, all of them give us a lot of confidence we can deliver on the targets we've announced this week.

And Nik's second question was, other than Moomba CCS, will the realization of your 30% emissions reduction target by 2030 require other projects -- other -- sorry, other CCS projects to be developed?

Look, that's a good question. I think I've just answered it, though. It's a combination of all of those things, right? So it's -- because the efficiency projects aren't just in Moomba, right? The efficiency projects are across all of our assets. There's projects we're looking at in PNG. There's projects we're looking at in Western Australia. And of course, there's the expansion of the Moomba CCS Phase 1 project. So some of the things like the electrification projects that we talked about earlier on. So it's really a combination of all of those things. Of course, if we got something like Bayu-Undan CCS up, then those 2 projects, Phase 1 Moomba and Bayu-Undan together, get us there without doing anything else. And so we'll look at this. And then you would probably accuse me of 30% being a soft target, right? But what we have done is look at this on a probabilistic basis across all of those projects, and we're confident when we look at the portfolio of opportunities we have that we can achieve that target.

Okay. The next question is from Alistair Rankin at RBC, and I think this is a bit of a similar question to Adam Martin's that we covered earlier. But is the initial 1.7 million tonnes of CO2 at Moomba CCS filled entirely by Santos and Cooper Basin JV CO2 emissions? Or are there third-party sources that will contribute as well? And then the second part of the question, are you seeing appetite from third parties that could potentially underwrite expansion of the Moomba CCS facility?

Yes and yes.

Okay.

Buys you more time, doesn't it?

And then the final question through the webcast is from David Whittaker at New South Wales TCorp. And David's question is around the scenario analysis that Jane spoke to. David says, thanks for the presentation. Is the IEA net zero scenario carbon price incorporated in the chart on Slide 15? It appears your valuation range is quite a bit lower than the base case under the IEA NZE 50, even with the high carbon price forecast. What would be the company's approach to achieving better portfolio value under the IEA net zero scenario?

The answer is we've used those carbon prices but not necessarily for the price we get for the credits. So I think that's where the question is coming from. So we've used more conservative assumptions. And I think I'll just look to Alicia. I think they're laid out in the report, Alicia, quite clearly. And so when you get time to read the report, you'll see what those assumptions are and how we've assumed what percentage of credits are surrendered, what percentage would be sold into the markets that get market pricing. And so I'll refer to the report, the answers in the report or refer to the report, but we're not assuming that we get that IEA price for the carbon credits that we generate.

That's all the questions from the webcast.

Yes, good. Anything else in the room? Those -- I guess, those little cakes and things you've got on the table are attractive, and you don't want to ask any more questions, you want to get to the cakes. But look, I'll take the opportunity then to wrap up, and I'd just like to say thanks again to all of you taking the time and come and share this with us this morning. We are excited. We are excited about the journey we're on. We're excited about the opportunities that we're developing here. This is a strategy to build a business. This is not a compliance plan. This is not a compliance strategy. This is a growth strategy. It's where we think Santos can be. That scenario the last questioner asked about, it does show the valuation of the company in that scenario going backwards because of the way we've evaluated. I would argue the company will be worth a lot more in that scenario in real life when you take into account how you would value that business. And because that's a net zero business that will be supplying energy globally to the partners and the customers that we're supplying today, that will be a mixture of fuels, a mixture of energy, as we discussed earlier on and generating significant carbon or revenue from carbon credits that I believe is a very conservative assumption in all of those scenarios. So look, I'm very excited about the future that we're sharing with you today for our company. We're committed to this, and I look forward to updating you in the years ahead. So thank you very much again. Thanks very much. Bye.