Chevron inks farm-out deal for Kalinga project

MANILA, Philippines –  Chevron Corp. has forged an alliance with the joint venture of Aragorn Power and Energy Corp. (APEC) and Guidance Management Corp. (GMC) for the development of geothermal energy in Kalinga province.

APEC informed the Philippine Stock Exchange over the weekend that it had signed a farm-out agreement with Chevron. The deal will allow APEC and GMC to control at least 40 percent of the geothermal project.

GMC is a tie-up among Spanish, Australian and American investors while APEC is a unit of the Belle Corp.-led APC Group. Chevron, on the other hand, is the largest producer of geothermal energy in the world.

“Being a renewable energy service contract, this will be the first major international investment to the country under the Renewable Energy Act of 2008,” APEC said.

It added that they have also agreed to enter into a joint operating agreement that will put Chevron in-charge of the exploration, development and operation of the steam field and power plant activities for the geothermal project.

The group is eyeing to develop geothermal steam fields that can generate around 100 megawatts (MW) of new power capacity, envisioned to provide an additional source of clean, indigenous and reliable baseload power to the Luzon grid.

It is estimated that a 100-MW geothermal project would cost about $300 million.

In 2008, the service contract for the project, which covers an area of over 26,000 hectares, was awarded to the consortium of GMC and APEC.