PNOC enlists for $1-B geothermal proj in Indonesia

PNOC-Energy Development Corp. (EDC) has tied up with Pertamina of Indonesia and Marubeni Corp. of Japan for a $1-billion geothermal drilling project in Indonesia, a top EDC official said.

EDC chairman and president Sergio Apostol told The STAR that a team from Pertamina will come to Manila next week to firm up the agreement.

"We will be finalizing the deal next week. We will be signing a contract soon," he said.

According to Apostol, the deal was already long-delayed. "There was an executive committee doing the negotiations before. We have requested Energy Secretary Vincent Perez if EDC could sign the contract directly with Pertamina," he said.

He said one-third of the project cost will be financed by EDC through the help of Japan Bank for International Cooperation

JBIC). This $302 million share will be in the form of equity and labor. The remaining project cost will be shouldered by the two other partners.

Specifically, the contract will allow the three firms to drill and develop geothermal wells in Lumut Balai (330 megawatts); Ulubelu (110 MW) and Tompaso (60 MW) in Indonesia. Each well will need an average of $2 million budget.

Ulubelu and Lumut Balai are located in South Sumatra, while the third geothermal prospect, Tompaso, is in North Sulawesi.

EDC has been trying to come up with a concrete agreement with Pertamina, Indonesia’s state enterprise for oil, natural gas and geothermal exploration and development, since July this year.

In 2002, an EDC evaluation team had conducted with Pertamina a technical and economic assessment of three potential geothermal projects in Indonesia.

The team conducted an extensive review of available information from Pertamina, site visits, sampling, assessment of existing infrastructure, market demand and supply analysis, review of the legal and fiscal framework and financial analysis.

In mid 1996, with the slowdown of in-house and Philippine drilling activities, EDC’s Energy Drilling Division (EDD) saw the opportunity to expand into overseas contracts.

To realize its vision as a global player in the drilling industry, EDD organized a marketing team composed mostly of drilling division insiders. The primary task of the group was to identify companies with drilling projects and participate in the drilling rig tender process.

After over two years of sourcing out service contracts, two EDC drilling rigs left the country for Indonesia and Papua New Guinea to complement drilling contracts.