Government-led Geothermal Drilling in Progress, Says Energy Minister

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 185.Pers/04/SJI/20201

Date: 2 June 2021

Government-led Geothermal Drilling in Progress, Says Energy Minister

Indonesian Minister of Energy and Mineral Resources (EMR), Arifin Tasrif, explained the progress of the development of energy and mineral resource infrastructure in fiscal year 2021 to Commission VII of the House of Representatives of the Republic of Indonesia (DPR RI). One of the progress explained was about the geothermal exploration program carried out by the Ministry of EMR (government drilling).

"For geothermal infrastructure, two drilling points are in progress. This program is for slim hole drilling, aimed to detect geothermal sources," said Arifin in a Working Meeting with the Commission on Wednesday (2/6).

According to Arifin, geothermal exploration is a high-risk activity. Geothermal project losses are largely due to exploration failure. As a result, the electricity price from geothermal power plants is quite high.

"High exploration costs are included in the cost components. As a result, the cost of geothermal electricity per kWh is far above the average electricity price. This of course is very burdensome for the APBN (State Budget)," he continued.

For this reason, the Ministry of EMR took the initiative to 'take' the risk of geothermal exploration. This way, the exploration cost is paid only once and not carried over for 30 years, as the practice has been so far.

"Now we have an initiative where the government bears the exploration risk. So, the cost can be paid out in one shot, not carried over for up to 30 years. Previously, the exploration cost is carried over for up to 30 years, and this has caused higher compensation subsidy," explained Arifin.

Arifin highlighted that through the program, investors will have more accurate data about the geothermal potential in an area. Accurate data can reduce the risk of exploration failure.

"Through preliminary slim hole drilling, geothermal potential is identified accurately. The cost is not too high, because drilling is carried out with small drill tools to find out the heat source in the earth. Thus, investors who are interested will have more definite data to reduce the failure risk," said Minister Arifin.

For the record, the Ministry of EMR has planned to conduct an exploration drilling program in two locations of geothermal work areas (WKP), namely in WKP Cisolok Cisukarame in West Java and WKP Nage in East Nusa Tenggara. The exploration drilling will be made with a small diameter (slim hole). Exploration drilling by the government is expected to increase the interest of investors in developing Indonesia's geothermal business. (IY)

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