Aragorn Power and Energy Corp., wholly-owned unit of listed APC Group Inc., has signed an agreement with Chevron Kalinga Ltd., subsidiary of Chevron Geothermal Philippines, to put up a 100-megawatt geothermal power project in Kalinga costing an estimated $300 million.
Aragorn and partner Guidance Management Corp. hold a geothermal renewable energy service contract from the Energy Department covering 26,000 hectares in the province of Kalinga.
“The parties signed a farm-out agreement which gives Aragorn and Guidance the option to take an equity position of up to 40 percent in the geothermal project. The parties also signed a joint operating agreement,” Aragorn said in a disclosure to the Philippine Stock Exchange.
Chevron under the agreement will be responsible for the exploration, development and operation of the steam field and power plant activities.
Aragorn said the project involved the development of steam fields that could generate around 100 MW, providing an additional source of base load power to the Luzon grid.
It said a 100-MW geothermal project would cost around $300 million and make it the first major international investment into the country under the Renewable Energy Act of 2008.
Aragorn and Guidance will conduct exploration in the area with a budget of $3.7 million in the first five years.
Guidance, which started operations in 2005, is a consortium of 14 Filipino, Spanish, Australian and American investors.
The company is also developing the Amacan geothermal prospect located at a 47,491-hectare area in Compostela Valley, which has a potential of 40 MW.
Guidance owns two coal operating projects in Negros and a $150-million joint venture bio-fuel project with Green Fuel Corp., a company owned by Endesa and Tecnicas Reunidas of Spain.
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