The joint venture's formation was approved by Geodynamics’ shareholders at a meeting yesterday.

The binding heads of agreement will see Origin take a 30% stake in a joint venture covering the South Australian geothermal tenements and associated assets belonging to Geodynamics.

Origin managing director Grant King said the arrangement represented a strategic expansion of his company’s renewable energy portfolio.

“We believe that geothermal energy will play an increasing role in securing the world’s future needs for clean energy,” he said.

“Geodynamics’ tenements are amongst the most prospective geothermal areas in Australia and include some of the hottest rocks in the world.”

The 30% JV stake will see Origin provide technical and related support through its extensive experience in upstream gas exploration and production, gas-fired power generation and through its exposure to geothermal power generation in New Zealand.

Origin will commit to $96 million of JV project expenditure, in addition to its 30% share.

If Geodynamics, as operator, completes its stage one ‘proof of concept’ phase by the end of March and within budget, Origin will commit a further $9.6 million.

This would bring Origin’s total anticipated commitment to project expenditure over the next two to three years to about $150 million.

At this time Origin intends to retain its 10% shareholding in Geodynamics, and also retain the rights acquired when it first invested in Geodynamics as a cornerstone shareholder.