Lopez unit, Canadian firm to develop geothermal areas in Chile, Peru

Energy Development Corp. (EDC), the country’s largest geothermal resources firm, signed a joint-venture agreement with Canada-based Alterra Power Corp. for the joint development of four geothermal concession areas in Chile and Peru.

In a disclosure to the Philippine Stock Exchange Monday, EDC said the joint-venture agreement covered the Mariposa project in Chile and three other prospective blocks in Peru: Tutupaca, Loriscota and Crucero.

“The agreement sets the framework and main commercial principles for EDC’s potential acquisition of a 70-percent interest in each of the four projects. Completion of the transaction remains subject to the preparation of fully termed documentation and necessary regulatory approvals,” the Lopez affiliate explained.

EDC president Richard B. Tantoco had said that the company intends to use the same farm-in arrangement, as what it did with Australian firm Hot Rock Ltd. Under this arrangement, the Lopez firm was able to acquire a 70-percent stake in four of Hot Rock’s geothermal concession areas which were also located in Chile and Peru.

The plan is for EDC to “farm in” the project by providing the necessary investments to proceed with the drilling activities. It may be a no-premium deal, which means that EDC need not pay a premium or upfront cost, Tantoco said.

As early as October last year, EDC already expressed its interest in Alterra Power’s geothermal concessions. Later, an agreement was signed, giving EDC the “exclusive right to conduct exploration and due diligence, and the sole option to advance the projects to joint venture stage.”

At present, EDC is ramping up its exploration activities here and abroad as it targets to add up to 1,200 MW to its existing portfolio within the next decade.

Half of this projected capacity is expected to come from its overseas interests, particularly in Chile, Peru, Indonesia and possibly Kenya.

EDC has earmarked only P100 million this year for initial exploration activities. But it also allotted $40 million for the drilling of geothermal wells in Latin America, primarily at the Mariposa concession in Chile, Tantoco earlier disclosed.