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Star Energy wins Chevron’s $3b geothermal assets
A consortium led by local energy firm Star Energy has won two geothermal assets worth US$3 billion offered in an auction by US-based energy corporation Chevron
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consortium led by local energy firm Star Energy has won two geothermal assets worth US$3 billion offered in an auction by US-based energy corporation Chevron.
California-based Chevron recently announced that its Indonesian subsidiaries Chevron Geothermal Indonesia and Chevron Geothermal Salak had entered into a sales and purchase agreement with the Star Energy-led consortium to sell Chevron’s Mount Salak and Darajat fields in West Java.
The consortium, consisting of Star Energy Group Holdings, Star Energy Geothermal, AC Energy — an affiliate of the Ayala Group in the Philippines — and Thailand’s EGCO, also won shares of Chevron’s Tiwi and Mak-Ban geothermal power plants in Southern Luzon, the Philippines.
“These assets deliver reliable energy to support the needs of Asia-Pacific’s growing economies,” said Jay Johnson, Chevron Corporation executive vice president for the upstream sector, in a press statement obtained by The Jakarta Post.
“This sale is aligned with our strategy to maximize the value of our global upstream businesses through effective portfolio management.”
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.
Star Energy, which is partly owned by tycoon Prajogo Pangestu, initially faced fierce competition from five other companies vying for the two assets, namely state-owned electricity firm PLN, state-owned oil and gas giant Pertamina, Japan-based diversified company Mitsui, Japanese trading house Marubeni and fellow local firm Medco Energi.
However, PLN pulled out of the race last month, claiming that it had been denied Chevron’s audited financial reports. Nonetheless, the electricity company has a power purchase agreement (PPA) to buy electricity from the Mt. Salak and Darajat geothermal power plants until 2040. The Mt. Salak and Darajat plants have a generating capacity of 377 megawatts (MW) and 255 MW, respectively.
Star Energy has expressed elation at last Thursday’s capture of the assets and claimed in its press release that “this transaction is a major step for Star Energy Group to become one of the biggest geothermal operators in the world and to achieve its vision of becoming a geothermal operator of at least 600 MW by 2028”.
For the acquisition of Chevron’s geothermal assets in Indonesia, Star Energy Group Holdings and Star Energy Geothermal will hold majority ownership at 68.31 percent, followed by AC Energy and EGCO at 19.3 percent and 11.89 percent, respectively.
Star Energy currently operates three units of the Wayang Windu power plant with a production capacity of 287 MW.
The company is also shortlisted to develop the Mt. Hamiding geothermal asset in North Maluku, with a planned capacity of 20 MW and estimated reserves of around 265 MW.
The government has long been trying to develop geothermal energy, generated by the heat of the Earth, as Indonesia is estimated to have around 38 gigawatts (GW) in geothermal potential.
Although the country hopes to procure 7,156 MW of geothermal energy by 2025, geothermal energy today only makes up around 5 percent of total installed power plant capacity of 53,000 MW.
