Medco, Ormat, Itochu in geothermal project

Jakarta's Medco Energi Internasional, Nevada's Ormat Technologies (NYSE: ORA) and Tokyo's Itochu said today they signed a deal to build a 340 megawatt geothermal project in Indonesia.

The $800 million Sarulla project will be owned and operated by the three-company consortium along with Pertamina, Indonesia's state-owned oil and gas company.

The project, located in Tapanuli Utara, North Sumatra, is expected to be constructed over the next five years.

The companies said it will be built in three phases of 110 to 120 MW each, with the first power generating unit scheduled to commence operation within 30 months of the financial closing.

The consortium expects Japan Bank for International Corporation to provide the majority of the project financing.

The rest of the Sarulla plant is to commence operation over a period of 18 months following the first unit.

Power from the geothermal plant will serve state-owned Indonesian power company Perusahaan Listrik Negara's North Sumatra-Aceh grid system, under a 30-year energy sales contract.

The consortium also said Japan's Kyushu Electric Power expressed "strong interest" in participating in the Sarulla Project.

Kyushu Electric owns and operates a number of geothermal power plants on Kyushu, the most southerly island of Japan.

The Sarulla consortium, led by Medco, said it will develop the Indonesian geothermal steam field, construct the field piping system and the three Ormat designed and supplied power plants.

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