Panax in talks with Bakrie to participate in E. Java geothermal project

Australian-listed firm Panax Geothermal said on Tuesday that it has started discussion with PT Bakrie Power to take part in the 165 MW Ngebel-Wilis geothermal project in East Java.

The Ngebel-Wilis geothermal working area has been awarded by the government to Bakrie Power in December 2010. Bakrie Power reportedly offered US$7.55 cents per kwh for the project.

In August 2010, Panax completed a ?binding terms sheet agreement? with PT Bakrie Power to form a joint venture firm for the exploration, development and generation of power from geothermal resources in Indonesia.

The joint venture will initially focus on the development of existing geothermal resources of the Sokoria project located on the Island of Flores, East Nusa Tenggara province for the development of a 30 MW geothermal power plant.

Bakrie won a tender in September 2009 to develop a 30 MW of power generation at the Sokoria geothermal field at an electricity tariff of $12.5 cent per kWh, excluding applicable carbon credits. Panax have a 45% working interest in the project.

In addition to the Sokoria project, the Joint Venture will also focus on the direct supply of approximately 25 MW of base-load geothermal power from existing geothermal resources to PT Dairi Prima Mineral (DPM)?s planned underground zinc/lead mine in North Sumatra. Panax has a 51% working interest in the project.

The electricity tariff in the first eight years of the agreement will be 15 US cents per kW/h and 12.5 cents per kWh for the remainder of the term of the agreement. In addition to this, Panax and Bakrie will be entitled to receive 50% of all carbon credits generated from the project. (denny)