HomeMedco-Ormat-Itochu Consortium Wins Tender for 340 MW Sarulla Geothermal Power Project in Indonesia Ormat Technologies to provide equipment to construct 3 new power plants Will have minority equity interest inowning and operating power plants
Medco-Ormat-Itochu Consortium Wins Tender for 340 MW Sarulla Geothermal Power Project in Indonesia Ormat Technologies to provide equipment to construct 3 new power plants Will have minority equity interest inowning and operating power plants
RENO, Nevada, July 31, 2006 - Ormat Technologies, Inc. (NYSE: ORA) today announced that a consortium consisting of its wholly-owned subsidiary, Ormat International, Inc., a unit of Medco Energi Internasional Tbk (Indonesia's largest private oil and gas company), and Itochu Corp. of Japan, has been declared the winner of a tender issued by the Indonesian state-owned utility PT PLN (Persero) for the development of the Sarulla, North Sumatra, Indonesia geothermal power project on an independent power producer basis.
The Sarulla project represents the largest single-contract geothermal project to date in the geothermal industry worldwide and is a reflection of the large scale and high productivity of Indonesian geothermal resources, as well as an indicator of the potential of the Indonesian geothermal power industry.
Medco is the leader of the Consortium, whose bid consisted of the completion of the development of the geothermal steam field, construction of the field piping systems and three ORMAT designed and supplied power plants with a combined gross capacity of 340 MW, owning and operating the facilities and selling electricity to PLN under a 30-year Power Purchase Agreement (PPA) expected to be concluded within 4 months. Ormat's specific responsibilities include the supply of the power plant and setting up and supervising the operations and maintenance of the plants, which will utilize its technology and equipment. The total project cost is projected to be about $600 million. The value of Ormat's scope of work for the supply of power plant equipment is expected to be approximately one third of the total project's cost. Release of the supply contracts to Ormat will be made upon the financial closing of the transaction, expected to be 12 months from the effective date of the PPA.
The Sarulla project is to be constructed over the next five years in 3 phases of 110 to 120 MW each, with the first power generating unit to be operational within 30 months and the last within 48 months from the financial closing. Power delivered by the project will serve the base load of PLN's North Sumatra - Aceh grid system. Upon the completion of the third phase, the expected annual revenue from electricity sales under the PPA will be approximately $110 million
The project will be owned and operated by an Indonesian special purpose company (SPC) that will be established by the Consortium members under the framework of a Joint Operating Contract with the concession holder, Pertamina (the state-owned oil and gas company). In addition to its responsibilities as the project's power plant equipment supplier and for supervision of operations and maintenance, Ormat will participate as a minority shareholder in the SPC.
The power plants to be constructed shall be Ormat Geothermal Combined Cycle Plants. Ormat has supplied and constructed five plants of this type to date in the U.S., the Philippines and New Zealand. As was the case with these plants, the Sarulla power plants will use air-cooled condensers to achieve 100% geothermal fluid reinjection, which serves to sustain the reservoir and to produce electrical power with very limited environmental impact.
Geothermal in Indonesia
The exploitable geothermal resource potential of Indonesia has been conservatively estimated at 20,000 MW, which is widely distributed throughout the archipelago. Present installed capacity is approximately 800 MW. The Government of Indonesia and its Parliament have continuously reaffirmed their recognition of the importance of geothermal energy in Indonesia's energy mix. Given the current power shortages, the projected rate of economic growth and high energy prices, the utilization of geothermal energy in the future is most likely to be further encouraged and accelerated.
The Sarulla Geothermal Working Area is one of Indonesia's largest and potentially most productive geothermal sites. It consists of four distinct reservoirs, two of which the Consortium plans to develop to achieve the project's power capacity under the bid. The SPC shall have an option to further expand the capacity at a later stage. Several geothermal production wells supporting generation of more than 100 MW have already been drilled in the two areas to be developed.
About Ormat TechnologiesOrmat Technologies, Inc. is a vertically integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, builds, owns and operates geothermal power plants and also designs, develops and builds and plans to own and operate recovered energy- based power plants. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power generating equipment and provides related services. Ormat products and systems are covered by more than 70 patents. Ormat currently operates the following geothermal power plants: in the United States - Brady, Desert Peak, Heber, Mammoth, Ormesa, Puna and Steamboat; in the Philippines - Leyte; in Guatemala - Zunil; in Kenya - Olkaria; and in Nicaragua - Momotombo.
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Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, see "Risk Factors" as described in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2006 and the Prospectus Supplement filed with the Securities and Exchange Commission on April 5, 2006.
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