Pertamina to expand geothermal business

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.