Pertamina, Unocal, PLN in geothermal talks

Pertamina, Unocal, PLN in geothermal talks

SINGAPORE (Dow Jones): Unocal Corp. is in continued
discussions with Indonesia's oil and gas company Pertamina and
power utility PT Perusahaan Listrik Negara to "move forward" the
Sarulla geothermal project in North Sumatra, Unocal's Vice
President for Commercial Affairs Barry Andrews told Dow Jones
Newswires late Thursday.

Unocal has drilled 13 wells on the site, which has confirmed
resources in excess of 400 megawatts, Andrews said. The company
has identified two development areas: Silangkitang with a
capacity of 100 MW, and Namora-I-Langit, which can support three
generation units totaling 210-290 MW.

The Sarulla project, which was postponed following the 1997
devaluation of the rupiah, could meet a growing need for power in
the area south of Lake Toba, Andrews said.

Negotiations are taking place on two fronts. Unocal North
Sumatra Geothermal Ltd. must negotiate its contract with
Pertamina to develop and operate the plant. Pertamina, together
with Unocal, must reach an agreement with PLN on the terms of the
energy sales contract.

Unocal is also in talks with PLN over the Salak geothermal
project in West Java. A Unocal unit provides steam to Salak's six
units, each with a capacity of 55 MW, and operates three of them
through a joint venture.

The Salak project is in operation while talks continue over
billing rates, Andrews said.

After 1997, PLN was unable to fulfill the terms of many power
purchase agreements signed with independent power producers. Some
projects were put on hold, while many others are currently being
renegotiated.

However, increased country risk and the need for sufficient
return to finance new projects mean PLN will have to agree to
higher rates if it wishes to attract future power sector
investment, Andrews warned.