Sumitomo EPC contract with Indonesia's Star Energy Holding

Feb. 05, 2007 - Sumitomo Corporation executed with Indonesia's Star Energy Holding's an EPC contract agreement for 1 x 117MW Wayang Windu Phase 2 Geothermal Power Project. On January 30, 2007, Sumitomo Corporation ("SC" Mr. Motoyuki Oka, CEO), executed with Indonesia's Star Energy Holding's subsidiary Magma Nusantara Limited ("MNL" Mr. Supramu Santosa, CEO), an EPC contract agreement for 1 x 117MW Wayang Windu Phase 2 Geothermal Power Project ("Project") located in Pangalengan, Bandung, West Jawa, Indonesia.

Fuji Electric Systems Limited ("FES") supplies major equipment such as steam turbine, generator and condenser for power station, and PT. Rekayasa Industri ("RI") constructs steam above-ground system for supply of geothermal steam to power station. Completion of the Project is scheduled in the 4th quarter of 2008. Contract price is around 14billion Japanese Yen. The power station for this Project equips steam turbine-generator with a world-record largest unit capacity of 117MW and is an expansion unit of Wayang Windu Phase 1 Geothermal Power Station which SC has constructed and completed in 2000 with the unit capacity of 110MW. This is the third time for Sumitomo Corporation to execute EPC contract for geothermal power stations in Indonesia following Wayang Windu Phase 1 and Lahendong Phase 2 for which SC is partnering with FES and RI.

Geothermal power station is utilizing geothermal energy as renewable one, so that emission of CO2 is minimal and it has an advantage from global environmental conservation point of view. In addition the current price hike of fossil fuel is offsetting the competitiveness of other conventional thermal power stations. Indonesia is proceeding with geothermal generation by utilizing vast geothermal resource.

Geothermal power plant requires higher level technology for protection from natural steam coming out the ground including corrosive materials. FES, who supplies main equipment for the power station, has a topside market share in the last decade and a lot of experience in this field. It is expected that FES's technology and experiences will be effectively utilized for the construction of the power station.

Indonesia has the power generating capacity with 27GW. Because power demand is being increased steadily by 7% per annum it is said that another 34GW is required by 2015. Under such circumstances the emergency planning for coal-fired power stations and IPP projects utilizing vast resource of coal are being pursued urgently.

On the other hand, Indonesia has largest geothermal resources in the world and its potential for geothermal power generation is expected around 27GW. Currently utilization for geothermal energy is around 800MW which is 3% of such potentiality. Indonesian government is now planning to increase geothermal power generation to 2GW by 2010 and 6GW by 2020.

SC is concentrating on geothermal power plant business in Indonesia basing upon the knowledge on this contract execution and the past experiences in and outside of Indonesia in order to meet future planning in Indonesian geothermal sector.