Philippines: Chevron likely to join US$300m geothermal venture

There are talks about Chevron being the international player to take part in a US$300m geothermal joint venture, based on comments by APC Group’s chairman, president and CEO Willy Ocier.

According to the news, “Listed APC Group Inc. (PSE:APC) is still eyeing to finalize a $300-million geothermal power venture with a foreign group within this year, its chairman, president and chief executive officer Willy Ocier said.

While the company executive was still unable to disclose the partner’s identity,?market insiders said the firm is in talks with a Philippine unit of US-based energy conglomerate Chevron Corp., which claims to be the world’s largest producer of geothermal power.

In a text message, Ocier?said a deal may be concluded “by September” this year.

APC was supposed to finalize the farm-in agreement and the joint operating agreement in March. However the parties decided to postpone the deal until after the new administration under President Aquino had settled.

“[Our partner] is just waiting for the new government,” Ocier said.

The signing of the agreement will pave the way for the construction of a 100-megawatt? (MW) geothermal power plant in Northern Luzon. APC earlier said the venture is expected to start exploration activities within the 26,250-hectare service area straddling Kalinga and Apayao provinces, which will cost an estimated $40 million.

The area is said to have a power generation potential between?120 MW and 200 MW.

Based on earlier discussions, the venture will be 60-percent owned by the foreign operator and 40 percent by APC subsidiary Aragorn Power and Energy Corp. ?and Philippine company Guidance Management Corp.

APC senior vice president and chief financial officer Bernardo Lim said the company preferred the strategy of starting power ventures “from scratch.”

APC also plans to tap benefits under the Renewable Energy Act, which provides incentives such as a seven-year income tax holiday, duty-free imports of equipment alongside exemptions from value-added tax. ?

The company said first quarter year-on-year revenues dropped a tenth to P71.52 million, due to a decrease in income from its manpower services. Net losses also increased to P3.2 million during this period, from P2 million in 2009.

Based on its website, Chevron began geothermal operations 40 years ago in the US through the development of The Geysers in California.

The company made two discoveries in the Philippines in the 1970s which led to the development of the Tiwi and Makiling-Banahaw geothermal projects on Luzon. It also made geothermal energy finds in Indonesia.

Chevron’s geothermal operations from the four projects in Indonesia and the Philippines have a capacity to produce 1,273 megawatts of geothermal energy.

APC shares ended flat on Monday at P0.45 each.”

Source: Business Mirror