COST ANALYSIS OF SLURRY INJECTION PROJECT FOR HYDROCARBON IMPACTED SOIL FOR PRODUCTION SHARING CONTRACT IN CENTRAL SUMATERA AREA

• Main Author: PADUA ANGGER RADITE 29115235 , ANTONIUS
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/21164
• Institution: Institut Teknologi Bandung

Approaching expiration period of Production Sharing Contract (PSC) with Government of Indonesia, <br /> <br /> company has obligation to complete the remediation program of Hydrocarbon Impacted Soil (HIS) <br /> <br /> which produced during company’s eksploration and production acitivities. Although it is mandated <br /> <br /> by the contractual obligation and the applicable regulation, company should consider cost efficiency <br /> <br /> in executing the remediation program. <br /> <br /> With extensive remediation program, Slurry Injection Project within company operation area <br /> <br /> becomes promising alternative in efficieny and remediation cost saving which projected to be <br /> <br /> executed up to end of contract. Two viable alternatives, “Build Company Owned Facility” and “Using <br /> <br /> Third Party Facilities Within Company Area”, are developed and reviewed within project planning. <br /> <br /> Alternative which give bigger cost saving will be recommended through financial perspective. <br /> <br /> Capital Expenditure, Operating Cost, and cost saving which are generated by this project execution <br /> <br /> will be mapped through PSC split mechanism, including depreciation model of the capital <br /> <br /> expenditure. Discounted Cash Flow Analysis will be applied to the annual net cash flow which are <br /> <br /> generated by the PSC split model. Net Present Value (NPV), Internal Rate of Return (IRR), Discounted <br /> <br /> Profitability Index (DPI), and Pay Back Period (PBP) are analyzed to determined the best alternative <br /> <br /> from financial perspective. <br /> <br /> This analysis generate alternative with NPV USD 3,846,777, IRR 38.29%, DPI 1.45, and Pay Back <br /> <br /> period 3.56 tahun. All indicators give conclusion that it is an acceptable project from financial <br /> <br /> perspective. With DPI value above company hurdle rate, which is 1.20, this project is recommended <br /> <br /> to be executed. <br /> <br /> There are key of uncertainties analyzed in this project, which are total project cost, project duration, <br /> <br /> and deviation in facility’s productivity especially the injection rate. Related to near of contract <br /> <br /> expiration date, the duration of project execution is the most sensitive factor to ensure the DCF <br /> <br /> parameters and minimum DPI still above company acceptable rate.