  We derive the 3D N=1 superpotential for the closed string sector of type IIB
supergravity on toroidal O5 orientifolds with co-calibrated G2 structure and RR
background flux. We find that such compactifications can provide full closed
string moduli stabilization on supersymmetric AdS$_3$ vacua, and once we
include brane-supersymmetry-breaking we also find indication for the existence
of classical 3D de Sitter solutions. The latter however are rather difficult to
reconcile with the shape moduli stabilization and flux quantization. We also
discuss the possibility of achieving scale separation in AdS$_3$ and dS$_3$
vacua, but such effects seems to be hindered by the geometric flux
quantization.
