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Chevron ends 2016 with SE Asia’s largest geothermal exit

A team led by Indonesia’s Star Energy is set to buy the US major’s geothermal assets in two countries in a deal reportedly valued at $3bn.

Chevron has agreed to sell its portfolio of geothermal assets in Indonesia and the Philippines to a consortium led by Indonesian energy company Star Energy.   

Under the agreement, Star Energy and its geothermal unit will hold a combined stake of 68.31 percent in the portfolio, followed by the Philippines’ Ayala Corporation via its AC Energy subsidiary (19.3 percent) and Thailand-based independent power producer EGCO (11.89 percent). 

The Indonesian assets include the Darajat and Salak geothermal fields in West Java, which have a combined capacity of 235MW equivalent of steam and 402MW of electricity. 

In the Philippines, Chevron subsidiaries have a 40 percent stake in the Geothermal Production Company, which operates the Tiwi and Mak-Ban plants in Southern Luzon with a combined capacity of 700MW.

The deal marks the largest one in the sector in Southeast Asia in 2016, according to Clifford Chance, legal advisor to the buyers. Transaction size was not disclosed but reports said the stakes were valued at about $3 billion. 

Chevron and Star Energy could not be reached for further details on the deal, while AC Energy and EGCO had not responded to queries by press time. 

“These assets deliver reliable energy to support the needs of Asia-Pacific’s growing economies,” said Jay Johnson, executive vice-president of Chevron’s upstream division. “This sale is aligned with our strategy to maximise the value of our global upstream businesses through effective portfolio management.” 

Star Energy said that the transaction is a big step for the group to become one of the world’s biggest geothermal operators. The company aims to grow its geothermal portfolio to at least 600MW by 2028. 

For its part, AC Energy aims to reach 2GW of renewables capacity by 2020, according to John Eric Francia, the unit’s chief executive. 

Completion of the transaction remains subject to approval by the Philippine Competition Commission, among others.