Indonesia to cut oil use and develop untapped geothermal energy

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Indonesian government has planned to cut national oil consumption by more than a quarter within five years by turning to Indonesia's vast, untapped geothermal power sources, local media reported in Jakarta on Monday.

Sukhyar, the Energy and Natural Resources (ESDM) ministry's head of geology, said on Sunday that developing 4,000 megawatts of geothermal capacity by 2014, as planned under the second phase of a "fast-track" generating program, would save 60 million barrels of oil a year.

It would thus offset slipping national oil production and help Indonesia trade millions of tons of carbon credits generated by the cleaner energy, he added.

Sukhyar said the country's energy road map called for more than 9,000 MW of geothermal power -- extracted from natural heat stored deep in the earth -- to be developed by 2025, saving a total of 4 billion barrels of oil.

"That is magnificent," Sukhyar was quoted by the Jakarta Globe daily as saying on the sidelines of the World Geothermal Conference opening ceremony in Bali.

An estimated 40 percent of global geothermal power reserves are in Indonesia. That is about 27,000 MW in annual capacity, but Energy Ministry data says only 1,198 MW has so far been tapped.

One of the biggest obstacles is the cost. The nation currently relies mostly on dirty coal-fired power plants using locally produced coal. A geothermal plant costs about twice as much, and can take many more years to get onstream.

"An investment of 12 billion U.S. dollars is needed to add 4, 000 MW of capacity," energy analyst Herman Darnel Ibrahim said in the same occasion.

Indonesia has the pledges of foreign lenders to help the country's geothermal energy exploration financing to up to 400 million U.S. dollars. The World Bank and the Asian Development Bank (ADB) were among financiers pledged their promises late last year.

The government hopes to raise 12 billion U.S. dollars in investment in the fast-track program's second phase. It is also seeking help from private investors and partners including Japan and the United States, and it is making its case at this week's conference in Bali, at which 2,000 participants from 85 countries are expected.

Surya Darma, head of the Indonesian Geothermal Association, said developing the country's capacity meant 50 billion U.S. dollars worth of investment opportunities.

Energy Minister Darwin Zahedy Saleh said the Bali forum would be useful for Indonesia to attract investors, as corporate chief officers from around the world would leave with a greater appreciation of the benefits of geothermal power and the opportunities that Indonesia offered.

A consortium of U.S., Japanese and Indonesian companies and state electricity firm PT PLN have completed agreement to build up over 340 MW project in Sumatra, the Sarulla project.

It will be Indonesia's second biggest geothermal plant, after the Wayang Windu facility in West Java.

Meanwhile, several firms such as Tata and Chevron have submitted bids to build a plant of up to 200 MW in North Sumatra.

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