Origin Energy’s hydro project takes a step forward

Back in April 2012, Origin Energy (ASX: ORG) announced that it had partnered with Xstrata — now Glencore Xstrata (LON: GLEN) — to pursue a major hydroelectric project in Chile.

The agreement involved Origin taking 51% of the development company Energia Austral, as well as the lead role in developing the project. The first stage involves spending approximately $75 million over 2012-2015 conducting a detailed feasibility study followed by a further $75 million toward a final investment decision should the project pass the initial feasibility test.

It appears an important milestone has been reached with the Australian Financial Review reporting that the project has received an Environmental Qualification Resolution from the necessary Chilean regulatory authority.

Origin already has experience operating in Chile with a 40% interest in the country’s leading geothermal exploration company, Energia Andina and it also has considerable experienced in hydroelectric assets, thanks to its major shareholding in NZ-based Contact Energy (NZE: CEN). While the environmental approval is an important achievement for the feasibility study, Origin shareholders will still have a couple more years to wait for a final decision to be reached on the viability of the project.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy.

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