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Jakarta Post

PLN upbeat about winning Chevron geothermal bids

  • Fedina S. Sundaryani

    The Jakarta Post

Jakarta   /   Mon, October 24, 2016   /  07:44 am
PLN upbeat about winning Chevron geothermal bids Gas issue: An operator monitors the loading process of LNG tankers into the MT Aquarius tanker berthing at the Donggi Senoro refinery in Uno village, Batu Banggai, Central Sulawesi, on Saturday. The facility is set to strengthen gas supply to power plants in the western part of Java. (JP/Ricky Yudhistira)

State-owned electricity company PLN is eyeing two geothermal assets that US-based Chevron is currently offering for auction.

To date, six companies, including PLN, are in the running to take over Chevron’s Mount Salak and Darajat geothermal fields in West Java, which are estimated to be worth a combined US$3 billion. The auction winner is scheduled to be announced in January.

PLN corporate communications head I Made Suprateka said on Friday that the company was confident it would secure the deal as it already had a power purchase agreement (PPA) with Chevron to buy electricity from the Mt. Salak and Darajat geothermal power plants, each of which has a capacity to generate 377 megawatts (MW) and 255 MW of electricity, respectively.

“To be honest, we need [the assets] because we want to decrease our production costs,” Made told reporters.

PLN currently buys electricity from the Darajat field for 6.63 cents per kWh and from the Mt. Salak field for 7.05 cents per kWh.

Made said the takeover would help PLN push down cost to around 6 cents per kWh in the long run. Furthermore, acquiring Chevron’s two geothermal assets would help PLN reach the government’s target of procuring 23 percent of all electricity from new and renewable sources by 2025.

Geothermal energy, created by the heat of the Earth, is able to generate consistent power while producing almost no greenhouse gases.

Although Indonesia is estimated to have around 28 gigawatts (GW) in geothermal potential, the country has targeted the use of geothermal energy at 7,156 MW, which would make it the biggest geothermal energy power producer in the world.

Currently, geothermal energy makes up only around 5 percent of the country’s total installed power plant capacity of about 53,000 MW.

The government has appointed public utility firm PLN to develop the Ulumbu and Mataloko geothermal fields in East Nusa Tenggara, which are able to produce up to 50 MW and 22.5 MW of electricity, respectively. PLN president director Sofyan Basir has committed to completing the assignment by early 2020.

Earlier this week, the Energy and Mineral Resources Ministry’s geothermal director, Yunus Saefulhak, said 44 companies had put in bids for the Mt. Salak and Darajat geothermal fields. However, the companies have been filtered down to six, namely PLN, state-owned oil and gas giant Pertamina, Japan-based diversified company Mitsui, Japanese trading house Marubeni and local firms Medco and Star Energy.

“Right now they are at the fifth stage, which is to receive a binding bid from the bidders. The final result will most likely be announced in January,” he said.

Officials from the Indonesian unit of Chevron did not immediately respond to a request for comment from The Jakarta Post.

Chevron, the second-largest US oil producer after Exxon Mobil Corp., has slashed jobs, canceled drilling projects and sought asset sales in response to a slump in global energy prices over the past two years. The San Ramon, California-based company is aiming to sell its main Asian geothermal operations in Indonesia and the Philippines.

In July, the company reported its third straight quarterly loss, the longest slump since at least 1989, Bloomberg reported.

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