By OGJ editors
HOUSTON, July 14 -- Unocal Corp.'s unit Unocal North Sumatra Geothermal Ltd. (UNSG) agreed to sell its rights and interest in the Sarulla geothermal project to PLN, the state-owned electric company, for $60 million.
Under the heads of agreement, PLN would acquire Unocal North Sumatra's interest in a Joint Operation Contract with Pertamina and an Energy Sales Contract with PLN (OGJ, Mar. 8, 1993, p. 20).
The transaction is expected to close in September 2003. Unocal expects to record a gain on the transaction in the third quarter.
On the Sarulla project, UNSG has conducted extensive exploration activities, including drilling 13 wells in three separate prospects. In 1995, the first commercial geothermal resources were discovered in Silangkitang.
In 1998, the project was temporarily postponed through a presidential decree because of Indonesia's economic crisis at the time. The presidential decree was later revoked.
Unocal negotiated with PLN for a long-term contract, but Unocal's legal, technical, and commercial requirements to invest more in the project could not be satisfied, the company said.
PLN's proposal to purchase the contracts from UNSG became a preferred option for settling the contract issues, Unocal said.
