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Chevron: better pricing structure needed for Indonesia

Chevron geothermal power plant Tiwi, Albay, Philippines (source: flickr/sherwin_magayanes)
Alexander Richter 5 May 2014

In an interesting interview in the Jakarta Post, Chevron Geothermal & Power Director Javier A. La Rosa makes a strong statement of a better pricing structure needed for geothermal to take off in Indonesia.

With Indonesia being one of the countries with huge geothermal resources and untapped potential, things have not really gone as planned. In a rather interesting interview, the Jakarta Post talks to Chevron Geothermal & Power president director Javier A. La Rosa  exploring what are the “key obstacles hampering Indonesia’s aim of developing [its] geothermal potential.”

Mr. La Rosa makes some interesting points on the role of the industry in relations to technology, and the government’s role towards communities, but mostly he touches upon pricing structure for geothermal power in Indonesia.

He describes the pricing structure of Indonesia as an “interest mechanism” and that there are questions on the level, asking if the current pricing level is high enough to make geothermal viable?  He says, that “if that ceiling price is too low and players start bidding over that price, we’re going to end up at a point where the projects cannot be developed.

If we look at how much we pay, how much the government pays for the oil, how much the government will pay for liquefied natural gas (LNG), and how much the government pays for geothermal, that will give you an idea of how high it could be.”

Chevron essentially describes current pricing as “uneconomical”. Should this change Chevron sees itself in a position to invest more in development in Indonesia.

To read the full interview see The Jakarta Post