Chevron to go into second-round bids for its US$3 bn Asian geothermal assets

An invitation for second-round bidding for Chevron Corporation’s geothermal energy assets in Asia, reported to fetch around US$3 billion, has been given to China General Nuclear Power Corp., the country’s biggest nuclear power operator, according to sources.

Jakarta-based PT Medco Power Indonesia is considering joining a separate shortlisted consortium that includes Japanese trading house Marubeni Corp. and Philippine energy producer Aboitiz Power Corp. Citigroup Inc., Chevron’s adviser on the sale, will call for second-round bids later this month, the sources said.

In an attempt to counter a slump in energy prices, the American multinational energy corporation Chevron has slashed jobs, canceled drilling projects and sought asset sales. Chevron is aiming to sell its main Asian geothermal holdings, which generate energy from the earth’s heat, in Indonesia and the Philippines.

Chevron’s Indonesia Salak field, one of the world’s largest geothermal operations, supplies a power plant that has 377 MW (megawatts) of total capacity, according to its website. It also has a 40% stake in the Philippine Geothermal Production Co.

Medco Power President Director Fazil Alfitri also said in a phone interview that they are considering partnering with a Japanese company and a Philippine company, declining to name Medco Power’s potential partners.

Earlier this month, Aboitiz said it partnered with Marubeni, while Medco said in August that they have submitted a bid to buy a stake in the Chevron assets.

Other companies that are also considering making offers for Chevron’s geothermal assets include sovereign fund China Investment Corp., Malaysia’s power producer Malakoff Corp., Japan’s Mitsubishi Corp., and Ormat Technologies Inc.

Chevron has said it plans to raise US$5 billion to US$10 billion through next year from sales including the geothermal unit and assets in Hawaii, Canada, Myanmar and South Africa.

According to data compiled by Bloomber, the company reported in Julyits third straight quarterly loss, which is the longest slump it had since at least 1989. The industry is struggling with a persistent glut of oil that’s sunk prices and forced companies to shrink drilling programs and cut spending.