Chevron to sell power from geothermal plant

Chevron to sell power from geothermal plant

Grace Nirang, Bloomberg/Jakarta

Chevron Corp., the second-largest U.S. oil company, will start selling power from its US$128 million geothermal in West Java in the third quarter of 2006, which may help reduce electricity shortages.

The 110-megawatt Darajat III plant, located in the town of Garut, will add to Chevron's current generating facilities of Darajat I and II, outgoing president director of PT Chevron pacific Indonesia Wahyudin Yudiana Ardiwinata said in a phone interview in Jakarta on Monday. Chevron owns 95 percent stake Darajat III and PT Darajat Geothermal Indonesia holds 5 percent.

"We believe we can meet the schedule and start operating the plant in the third quarter," said Yudiana, who will retire on Dec. 1 and be replaced by Suwito Anggoro.

Indonesia needs to spend about $27 billion on new plants and power lines by 2012 to avoid power shortages, according to the World Bank. The country's power utility, hobbled by government- mandated price caps on power, doesn't have the money to build the plants.

Chevron signed power sales contracts with state utility PT Perusahaan Listrik Negara (PLN) and state oil and gas company PT Pertamina last year, Yudiana said. The Darajat plants use steam supplied by Pertamina, which has an agreement with the government to develop geothermal resources in the area.

The company will sell the electricity to PLN at more than 4 U.S. cents per kilowatt hour, he said.

The project will seek credits under the United Nation's Clean Development Mechanism for contributing to lower carbon dioxide emissions. The credits would be tradable, enhancing the venture's profitability, Chevron said in an e-mailed statement.

A group including PT Thiess Contractors Indonesia and Kanematsu Corp. was awarded the contract to build the new plant.