Pertamina unit pulls out of Kenya geothermal project on weak returns

State energy firm PT Pertamina (Persero) has decided to withdraw from a planned geothermal venture in Kenya after determining the project did not meet its investment criteria, a senior executive said on Thursday.

John Anies, president director of Pertamina New & Renewable Energy (Pertamina NRE), said the company would not proceed with the proposed development of the Suswa geothermal field in Narok, Kenya, which had been earmarked to be carried out by its unit PT Pertamina Geothermal Energy Tbk (IDX: PGEO) in partnership with Kenya’s state-owned Geothermal Development Company (GDC).

“After calculating based on what they offered and the available resources, we concluded that the investment was not attractive,” Anies was quoted as saying.

Pertamina NRE, through PGEO, had in 2024 agreed to cooperate with GDC to develop the Suswa field, which is estimated to hold geothermal potential of between 100 megawatts (MW) and 300 MW. PGEO had estimated it would need to invest about $200 million in the project.

Read also: PGE signs deal to develop Kenyan geothermal fields

PGEO and GDC signed a non-disclosure agreement in September 2023 covering the development of the Suswa field. GDC is wholly owned by the Kenyan government.

The Indonesian company had also previously signed a memorandum of understanding with Africa Geothermal International Ltd. to explore development of the Longonot geothermal field in Kenya’s Great Rift Valley.

Anies said Pertamina NRE must ensure any overseas project meets its internal economic benchmarks and would pursue alternative opportunities if returns were deemed insufficient.

PGEO, which is listed on the Indonesia Stock Exchange, is continuing to expand its geothermal portfolio domestically as it targets reaching 1 gigawatt (GW) of installed capacity within the next two to three years.

The company is developing several projects with phased commercial operation dates through 2029, including Hululais Units 1 and 2, Lumut Balai Unit 3, Lahendong Units 7 and 8, a Bottoming Unit 2 project, and exploration at the Gunung Tiga geothermal field.

Editing by Reiner Simanjuntak