French utility Engie and Japan’s Marubeni are among several suitors preparing to bid for Chevron Corp’s Asian geothermal energy blocks valued at about $3bn, sources familiar with the matter said. 
Potential buyers including Southeast Asian firms are attracted by the opportunity to gain control of large blocks of geothermal assets located in Indonesia and Philippines. 
“There’s a lot of jostling going on to see who’s teaming up with whom. I expect to see companies forming consortiums for this big sale,” said one banker involved in the process. “The Japanese are key as whoever ties up with them would have access to low cost funding and that boosts their chances,” he added. 
Indicative bids for the assets are due this month, said some of the sources, who declined to be identified as the information is not public. 
Like many rivals, Chevron is selling assets, cutting jobs globally and slashing capital spending to save cash in a bid to preserve its dividend amid weak oil prices. 
Chevron, which hired Citigroup as its adviser for the sale, kicked off the auction last month, sources said. Chevron, Marubeni, Engie and Citigroup declined comment. 
“For global players, it provides an entry into the geothermal markets in Indonesia and possibility of further expansion,” said consultancy Wood Mackenzie’s principal power analyst Bikal Pokharel. 
Two Chevron subsidiaries operate geothermal projects in Salak and Darajat fields in west Java with a capacity to generate nearly 650 megawatts of electricity. The combined output produces enough renewable energy to supply about 3mn homes, according to Chevron’s website. 
Pokharel said Indonesia had estimated a geothermal potential of 27,700 megawatts, the highest in the world, but its current installed capacity was less than 5% of the potential. He said contradictory and untested regulations, land acquisition, building transmission infrastructure and lack of clarity in pricing methodology remained major challenges. 
Medco Power, which operates two geothermal projects in Indonesia, is keen to buy the assets and would consider looking for a partner due to the large value of the assets. 
“We have expressed our interest in seeing the data on its asset,” Fazil Alfitri, president director of Medco Power, a subsidiary of Medco Energi Internasional, told Reuters. 
Indonesia has unveiled land and regulatory reforms aimed at boosting production of geothermal energy, but investment in renewables has been slow in Southeast Asia’s largest economy. 
Geothermal energy is created by the heat of the earth. It generates reliable power and emits almost no greenhouse gases. 
Chevron also has a 40% interest in Philippine Geothermal Production Company, which produces steam energy for third party-owned geothermal power plants. They have a combined generating capacity of 692 megawatts. Southeast Asian power firms Aboitiz and Banpu Power may bid for Chevron’s assets, said the sources. Banpu said it would consider the terms and size of the assets before making a decision. 
Sources said Chinese power firms are also expected to participate in the auction.