TANGERANG, Indonesia, May 15 (Reuters) - State energy

firm Pertamina and U.S. major ExxonMobil ( XOM ) plan to conduct

appraisal drilling for a carbon capture and storage (CCS) hub in

Indonesia, with the companies signing an initial storage deal

with South Korea's KNOC on Wednesday.

Indonesia, which estimates its depleted oil and gas

reservoirs and saline aquifers could provide storage for

hundreds of gigatonnes of CO2, this year allowed CCS operators

to set aside 30% of their storage capacity for imported carbon.

During the Indonesia Petroleum Association's annual

conference on Wednesday, Pertamina and ExxonMobil ( XOM ) signed a deal

for preliminary work to design a commercial model for the Asri

Basin Project CCS hub.

"Pertamina Hulu Energi and ExxonMobil ( XOM ) will carry out

appraisal drilling in order to collect data which will later

become a reference for the development of the hub," said Awang

Lazuardi, chief executive of Pertamina Hulu Energi.

A preliminary joint study by Pertamina and Exxon found that

the Asri basin, in Pertamina's Offshore South East Sumatra

block, had the capacity to store up to 3 gigatonnes of carbon

dioxide and would require investments of $2 billion.

The companies also signed a framework agreement with South

Korea's KNOC allowing it to join the partnership and inject

emissions into the facility, Nicke Widyawati, chief executive of

Pertamina, told reporters on the sidelines of the conference.