ANALYSIS OF BUSINESS RISKS ON LIQUEFIED NATURAL GAS OPERATIONS IN INDONESIA (A CASE STUDY AT PT. ERDGAS HM)

• Main Author: MANOPPO (NIM 29114523), CYANTHI
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26330
• Institution: Institut Teknologi Bandung

Liquefied natural gas (LNG) is a fossil fuel that has a crucial constituent as energy supply of the world. PT. Erdgas HM is a multinational corporation operating in LNG industries. “The Company” runs LNG business in Indonesia, which purchases natural gas from upstream as feedstock gas for the Company-owned liquefaction plant; it is an LNG downstream facility. <br /> <br /> Since the Company had entered the Operational stage, it needs to conduct analysis of the business risks to reflect the critical change of the Company business nature and organization. In operational stage, the Company had received feed gas, produce LNG, and deliver it to the buyers. If failed to manage the business risks, the Company will faced business issues which might cause total loss of plant, business interruption, and squeeze of profit margin, hence the Company could suffer from financial lost and reputation impact. This final project aimed to assist the Company to identify key risks, to assess and manage the risks, and to develop risk mitigation plan for key risks (high and extreme risks). <br /> <br /> The methodology used to explore the business issues were quantitative and qualitative method through primary data collection by questionnaire, interview, and focus group discussion; while secondary data analysis through literature study and documentation review. Following the ISO 31000, the data collected were then analyzed based on the risk management process. The result showed there were 51 risk scenarios, including nine key risks including 2 technical integrity risks, 3 commercial risks, 2 operational risks, 1 financial risk, and 1 regulatory risk. The major risks for the Company were failure of/loss of refrigerant compressor (including trip of each refrigerant compressor) which caused by machinery breakdown exposures; and failure of/loss of single gas turbine generator, including trip which would give rise to the largest machinery breakdown property. The mitigation plan was developed for key risks mainly technical activities that were set to reduce the risk impact and frequency, and insurance policy that was purchased to transfer the risk. <br /> <br /> Several recommendations were proposed to be implemented by the Company related to the risk management practices (re-assessment and continuous improvement on risk treatment action), asset valuation study, insurance management policy procedure, and insurable risk study.