INVESTMENT PROJECT ANALYSIS FOR PIPELINE SEGMENTAL REPLACEMENT AS PART OF COMPREHENSIVE PIPELINE MAINTENANCE (CPM) PROGRAM

• Main Author: Boediarto, Gunawan
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/39383
• Institution: Institut Teknologi Bandung

PT. Chevron Pacific Indonesia (CPI), as operator of SKK Migas with working area at Rokan Block PSC is the main crude oil producer for Indonesia’s national oil production since more than nine (9) decades ago. The crude oil have been produced from several oil fields that located scatter across Riau Province. On each oil fields there are production facilities consisting of wells, distribution pipelines, oil treating facilities up to shipping pipeline facilities to transmit crude oil to the export terminal in Dumai. Some of those facilities have reached the end of their operating life, this is including production pipeline in the Bangko Northern field. To secure oil production from Bangko Northern field, it is necessary to conduct a comprehensive pipeline maintenance program by replacing the pipeline segment in the Road Crossing (RC) section. The objective of this final project is to study the financial analysis of the pipeline segmental replacement project to assess the costs and benefits of the proposed investment project based on the available alternatives for pipeline segmental replacement. Discounted Cash Flow (DCF) method and Financial Sensitivity Analysis are used as financial tools to understand the economics of proposed investment project. The information generated from this analysis will provide financial information whether the investment for pipeline segmental replacement is attractive or not to be executed. The financial analysis will refer to Conventional PSC terms. For the decision making process, the decision criteria is the highest NPV value that generated from the available alternatives and proceed with Decision Tree analysis. After the most financially attractive alternative have been identified, then it will be determined the amount of the opportunity cost that arise due to selection of the preferred alternative if compared with the not selected alternatives. Results from the financial analysis inform that selected pipeline segmental replacement – Alternative 1 generates positive NPV = $ 39.195 millions, IRR = 645 %; greater than the company discount rate, high PI = 15 and short payback period (PBP) = 1.8 months. Therefore segmental pipeline replacement project is feasible to be executed soon start in Q2 2019.