Unocal, Pertamina seal pact on geothermal issues

EL SEGUNDO, Ca. – Unocal Corp., parent company of Philippine Geothermal Inc. (PGI), has announced its Indonesian subsidiary Unocal Geothermal of Indonesia, Ltd. (UGI) and Dayabumi Salak Pratama, Ltd. (DSPL), a 50-percent equity investee of UGI, recently reached an agreement with PT. PLN (Persero) (PLN), the Indonesia state-owned electricity company, and Pertamina (P.PTM), the Indonesia state-owned oil and natural gas company, on pricing and production issues at the Gunung Salak geothermal project in Indonesia.

Gunung Salak is a 330-megawatt geothermal steam production and electricity generation project on the western side of the island of Java. UGI operates the steam fields as a contractor to Pertamina and delivers steam to PLN which operates three electricity-generating plants at Salak. UGI also delivers steam to DSPL for three other generating plants that supply electricity to PLN on behalf of Pertamina.

Originally signed in 1982, the new agreement extends the contracts to 2040 and includes a commitment by PLN to accept as much steam and electricity as possible to meet increased demand in the Java-Bali power distribution system. It also reaffirms the Indonesian government’s guarantee of PLN’s obligations to UGI, DSPL, Pertamina and the project’s lenders.

"This is a win-win solution for all parties," said UGI president Brian Marcotte who added that "the people of Indonesia get cost-effective, environmentally friendly electrical power, and UGI has the opportunity to maximize the sale of steam to power these facilities and receive a return on its long-term investment in the geothermal and power sector–an important step toward restoring investor confidence in Indonesia."

In the Philippines, Unocal’s subsidiary PGI is also in advanced stages of its discussions with the Power Sector Assets and Liabilities Management Corporation (PSALM) to settle its long-standing contract dispute with National Power Corp., as aligned with the Power Reform Law. The discussions have focused on the continued development of the Tiwi and Mak-Ban geothermal projects which PGI pioneered and developed since the early 70s in partnership with NPC, where PGI supplies steam to NPC’s power plants.

Unocal said it looks forward to a successful outcome of these talks in the face of the renewed focus on the development of indigenous energy sources like geothermal, in keeping with the country’s goals for sustainable development and competitive electricity rates.

Unocal is one of the world’s leading independent natural gas and crude oil exploration and production companies. The company’s oil and gas activities are in North America, Asia, Latin America, and the North Sea. Unocal is one of the world’s largest producers of geothermal energy with operations in the Philippines and Indonesia.