PT Pertamina Geothermal Energy Tbk (PGE) has formed a joint venture with Chevron to participate in the tender for the Way Ratai geothermal working area (WKP) in Pesawaran Regency, Lampung.
This information has also been confirmed by the PGE corporate secretary Muhammad Baron. “Yes, in the terms of bidding, PGE formed a consortium with Chevron,” Baron said on Thursday (11/5).
However, Baron was hesitant to disclose the estimated funds that were allocated by the company for management of the Way Ratai geothermal area. “We cannot provide such information while the bidding process is still ongoing,” Baron added.
In competition with Ormat Teknologi
During the bidding process, the PGE and Chevron consortium will compete against PT Ormat Teknologi Indonesia for the development of the Way Ratai WKP concession in Lampung.
Baron said that PGE is optimistic about obtaining the rights to manage geothermal resources in the Way Ratai area.
Similarly, Ormat Teknologi Indonesia CEO Dion Murdiono, stated that the company is optimistic about winning the fierce competition against the PGE and Chevron consortium after submitting a sufficiently large offer for the WKP.
Moreover, according to Dion, Ormat has a technological advantage for the development of the Way Ratai geothermal area with medium and low temperature.
In addition, he said that the company has relatively offered a high bid compared to the PGE and Chevron consortium. “We are very happy with the resources, we bid with a fairly high price,” Dion said on Thursday (11/5).
The Energy and Mineral Resources Ministry itself is scheduled to close the Way Ratai WKP auction and announce the winner on May 19, 2023. The auction outcome is crucial to continue the development process of the field, which had been stalled previously.
Currently, the ministry is still reviewing the auction documents submitted by the two candidates. The geothermal director of the Energy at the Energy and Mineral Resources Ministry Harris Yahya pointed out that the technological advantage of the potential operator will be considered by the ministry when selecting the auction winner.
“How they will develop the area after obtaining the permit, what technology will be used, how many wells thay want to make, how long the process will take – all of these are factors we consider,” Haris said on Thursday (11/5).
Previous consortium withdraws permit
It is worth noting that the Way Ratai geothermal area covers an area of 70,710 hectares and has an estimated reservoir temperature of 203 to 247 degree Celsius. The potential electricity generation from the geothermal reserves can reach up to 55 megawatts (MW) from a possible reserve of 100 MW.
Way Ratai geothermal area was initially targeted to start operating in 2022. However, the previous consortium, initiated by PT Enel Green and PT Power Optima Way Ratai, decided to draw and returned the geothermal working area permit of Way Ratai last year.
Enel Green’s withdrawal from Way Ratai is a loss since the Italian-based company had previously committed to investing up to US$30 million for exploration of a geothermal power plant (PLTP). with Enel Green holding a majority stake of 90 percent in the Way Ratai management, the withdrawal not only represents a financial loss but also leaves PT Optima Nusantara Energi with the remaining ten percent ownership.
According to Think Geoenergy, Enel Green expressed dissatisfaction with the Indonesian government due to their inconsistent approach towards the power purchase agreement (PPA). A source within Enel Green conveyed disappointment over the government’s revised power tariff recommendation.
Read also: Chevron out, Italian ENI set to take over Indonesia Deepwater Development project
Indonesia’s geothermal energy potential
Located around the Ring of Fire, – a geological area containing around 900 volcanoes – the seismic activity surrounding Indonesia is extremely active, providing ample geothermal energy potential. Due to these features, Indonesia has an estimated 23.7 gigawatts in geothermal capacity across 30 sites, according to the ASEAN Briefing data.
With these reserves, Indonesia plans to generate 7.24 gigawatts of geothermal power by 2025 – which government officials said would requires US$15 billion investment.
However, in June 2020, the geothermal director of the Energy and Mineral Resources Ministry said that Indonesia would achieve its goal of having about seven gigawatts of geothermal power production by 2030, which would be five years behind schedule.
Currently, Indonesia has about 2.28 gigawatts of installed geothermal power capacity. While there are a number of challenges, including the energy source’s positioning in the regulatory and market landscape.
These challenges are exacerbated by Indonesia’s infrastructure shortcomings, which are particularly pronounced in the remote, hard-to-access areas where subterranean reservoirs are usually situated. As a result, despite Indonesia’s abundant geothermal resources, the expenses and uncertainties linked with exploration, land clearance, and drilling continue to present a significant challenge.
