BP mulls entering geothermal energy sector, says minister

Oil and gas giant BP Plc is currently studying the possibility of expanding its business in Indonesia by developing the country’s potential geothermal energy, a senior official says.

Energy and Mineral Resources Minister Jero Wacik told The Jakarta Post on Tuesday that the UK-based energy firm had been mulling the plan ever since the company’s chief executive, Bob Dudley, met with President Susilo Bambang Yudhoyono in May this year.

“During the talks, which took place in Yogyakarta, the President asked the firm’s CEO [Dudley] to enter the geothermal energy sector in Indonesia. After the meeting, I also mentioned our request to BP executives during my visit to London,” he said in a telephone interview.

The government was curious as to whether BP would enter the geothermal energy sector after another energy giant, US-based Chevron, had successfully become the world’s largest geothermal power producer after years of operating in Indonesia, Jero said.

According to Jero, based on the reports his office had received, BP has sent teams to Indonesia twice in recent months to explore the possibility.

While BP continued to study the prospect of entering the geothermal energy sector, the Energy and Mineral Resources Ministry would allow the company to conduct geothermal exploration surveys in 28 locations across Indonesia, he added.

“The Energy and Mineral Resources Ministry and the Forestry Ministry have signed an agreement allowing geothermal exploration in these 28 locations,” he said.

In his speech, which was delivered before hundreds of participants at the 19th Conference of the Electric Power Supply Industry (CEPSI) in Nusa Dua, Bali on Monday, Jero also encouraged investors to pour their money into Indonesia’s geothermal industry.

BP Indonesia was not available for comment on Tuesday.

Indonesia, which is surrounded by a number of tectonic plates, possesses 40 percent of the world’s geothermal reserves with a total potential of 29,000 megawatts (MW) scattered across 276 locations.

However, Southeast Asia’s largest economy can only utilize 1,226 MW or 5 percent of the total geothermal reserves as of today, which means the country is still striving to boost electricity production from this renewable resource, while depending on fossil fuels for electricity generation.

In addition to Chevron, other geothermal industry players in Indonesia include Pertamina Geothermal Energy, a subsidiary of state-owned energy firm PT Pertamina, as well as British Star Energy.

Chevron Geothermal and Power Operation, the local unit of Chevron, applauded the idea of a potential competitor in Indonesia’s geothermal reserves exploration, saying it could create “healthy competition among geothermal energy developers”.

“It will be very positive for the development of the geothermal energy industry as well as supporting the government’s programs on renewable energy resources,” Chevron Geothermal’s policy, government and public affairs manager, Ida Bagus Wibatsya, told the Post in a text message.

Earlier this year, the government finally increased the purchase price by state electricity company PLN for geothermal power plants to between 10 to 17 US cents per kilowatt-hour (kWh) from 9.7 cents per kWh to attract more investors to the business.

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