Pertamina to expand geothermal business
The Jakarta Post, Jakarta
State oil and gas company PT Pertamina plans to include the geothermal sector as a future core business, as it sees bright prospects for the geothermal business in Indonesia.
"We shall strengthen our foothold in the geothermal sector because of its huge potential reserves in Indonesia, most of which remain undeveloped," Pertamina upstream director Bambang Nugroho told reporters on Thursday.
According to government data, Indonesia, located in the "ring of fire" given the numerous volcanoes of the region, possesses 40 percent of the world's geothermal resources, which has the capacity to produce 20,000 MW of electricity.
As of November 2003, Pertamina's revenue from the geothermal sector was up 80 percent from Rp 295.4 billion in 2002 to Rp 451.3 billion.
Bambang said Pertamina would form a subsidiary company next year to focus on the sector and planned to increase its geothermal power generation capacity from 163 megawatts (MW) to 492 MW.
Its power plants in Kamojang, West Java (60 MW), Lahendong, South Sulawesi (40 MW), and Sibayak, North Sumatra (10 MW), would be expanded to meet the target capacity.
In addition, the company will complete the acquisition of the Wayang Windu power plant (220 MW) in West Java at year's end.
Bambang said Pertamina was still negotiating for the best price in acquiring the plant from Magma Nusantara Limited.
He said a number of independent consultants estimated the power plant's value at US$200 million to $260 million, but Pertamina hoped to get a lower price.
The planned geothermal subsidiary PT Pertamina Geothermal Indonesia is expected to commence operations in April 2004. It will become part of Pertamina's future holding company for upstream exploration and production of oil, natural gas and geothermal activities in 2005.
Pertamina is has been conducting assessments of all its business units after the company officially turned into a limited liability company in September 2003.
Despite having an enormous geothermal resource, Indonesia has thus far developed only a small number of geothermal power plants: the Kamojang, Wayang Windu, Salak and Daradjat in West Java; Lahendong in South Sulawesi and Sibayak in North Sumatra. The total power generation capacity stands at 747.5 MW.
The House of Representatives passed in September the geothermal bill, which aims to lure investors to the sector.