Indonesia-based Pertamina Geothermal Energy is reportedly in advanced talks to acquire a geothermal business owned by geothermal energy developer KS Orka Renewables.

The consideration could be up to $1bn, reported Reuters, citing undisclosed sources having information on the development.

Pertamina Geothermal Energy may sign a deal to acquire Sorik Marapi Geothermal Power in Indonesia before the end of 2023 once the negotiations conclude successfully.

However, the sources advised that there is no certainty of any agreement.

KS Orka Renewables acquired 95% shares of Sorik Marapi Geothermal Power in 2016.

Sorik Marapi Geothermal Power was established in 2010 by OTP Geothermal Power for the development and operation of the geothermal power plant. OTP Geothermal Power is owned currently by KS ORKA Group and Supraco Indonesia.

Located in Mandailing Natal Regency, North Sumatera Province, the 240MW Sorik Marapi geothermal project is said to be one of the largest developing geothermal projects in Indonesia.

According to the sources, KS Orka Renewables engaged DBS earlier this year for exploring the divestiture of the Indonesian geothermal power project.

KS Orka Renewables also owns the 30MW Sokoria geothermal power project located in Ende, Flores Island, East Nusa Tenggara Province.

The discussion about buying Sorik Marapi Geothermal Power comes as Pertamina Geothermal Energy plans to increase its geothermal capacity twofold by 2027-2028 with an estimated investment of $4bn.

According to Reuters, if the deal comes to fruition, it has the potential to be one of the most significant transactions undertaken by Pertamina Geothermal since its domestic initial public offering earlier this year.

The Indonesian company also entered into preliminary agreements with two Kenyan firms to explore potential partnerships for geothermal power projects with a combined estimated value of $2.2bn, reported the news agency.

In February 2023, UAE-based Masdar announced an investment in Pertamina Geothermal Energy to make its entry into the geothermal energy market.