A consortium of Indonesia's Medco Energi, Itochu of Japan and US contractor Ormat is finalizing details with state-owned companies Pertamina and PLN for the $800 million Sarulla geothermal project in North Sumatra, Upstream reported on Friday (31/8/07).
The proposed 340-MW geothermal project will be built over the next five years in three phases of 110 or 120 MW each. The first power-generating unit is expected to be operational within 30 months of the financial closing, with the two remaining units to follow within a further 18 months.
Power produced at Sarulla will serve PLN's North Sumatra and Aceh power grid.
The Medco-led consortium signed a heads of agreement with PLN and Pertamina to speed up the sealing of the energy sales contract and joint operating contract for the stalled geothermal project.
Sarulla, which lies in Tapanuli Utara, is the largest single-contract geothermal project in the world, according to Medco.
The three partners committed to completing development of the geothermal field, initially awarded to Unocal but shelved in 1998 because of the Asian financial crisis. PLN subsequently bought out Unocal's stake for $60 million.
The consortium will own and operate the plant, based on three Ormat-designed and supplied power units, and sell electricity to PLN under a 30-year contract, the terms of which have yet
to be finalized.
The Japan Bank for International Co-operation will provide most of the approximate $800 million total project financing via a deal the bank signed with the Finance Ministry.
Kyushu Electric Power Company is keen on the Sarulla project and the Japanese company's possible involvement is being negotiated under a memorandum of understanding signed last week with the consortium.