The Role of Pertamina in Geothermal Development in Indonesia

Abstract

At least 70 high enthalpy geothermal fields and prospects have been identified in Indonesia. Pertamina has estimated that the combined potential of these resources represents about 20,000 MW. Indonesia may have the highest geothermal potential in the world. From 1973 to 2004, 19 geothermal areas were drilled to explore, confirm, and develop geothermal resources in Java, Sumatra, Bali and Sulawesi. As of May 2004, seven geothermal fields are operating in Indonesia with a combined installed capacity of 807 MW.
Since 1982, geothermal development in Indonesia has been expedited by government regulations that allow the participation of the private sector, both local and international, in partnership with Pertamina. Seven private geothermal companies signed contracts of joint operation with Pertamina for 10 contract areas between 1982 and 1997. As a result of these contracts, by 2003, Pertamina and four private developers, together with the government utility PLN, had completed geothermal projects at Kamojang (140 MW), Salak (330 MW), Darajat (145 MW), Wayang Windu (110MW), Dieng (60 MW) in Java, Sibayak (2 MW) in North Sumatera and Lahendong (20 MW) in North Sulawesi. And another 170 MW, Darajat (110 MW) and Kamojang (60 MW), is expected to be completed by 2006. The severe economic crisis that started in late 1997 has adversely affected power sector demand and growth in Indonesia. This has resulted in significant delays to several geothermal projects in the advanced exploration and development stages. Changes in the regulatory environment for the geothermal industry and the resolution of the economic crisis are the major issues affecting the growth of the Indonesian geothermal industry.
In spite of the issues, increases in the power demand and electricity tariffs in the last three years, the business climate has changed, being more conducive toward investment. In addition, the issuance of new Regulations on Geothermal No.27/2003, Oil and Gas No.22/2001 and, Government Regulation No. 31/2003 keep Pertamina still interested in doing business in developing geothermal power, whether Pertamina's own or joint ventures. Pertamina, through its subsidiary company PT. PGE, is planning to have a total Geothermal Power Plant Installed Capacity of 1500 MW by the year 2010. The 1500 MW planned installed capacity comes from both the existing fields and new prospects. To achieve the 1500 MW target, alliance is a necessity.