INVESTMENT ANALYSIS ON LIQUEFIED NATURAL GAS PROJECT (A CASE STUDY IN LNG COMPANY)

• Main Author: Erdian, Oldy
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/41383
• Institution: Institut Teknologi Bandung

Natural gas is the most used energy after oil and coal that are used in Indonesia. Natural gas reserves are still quite large compared to petroleum reserves in Indonesia. The amount of natural gas reserves in Indonesia illustrates the strategic value of natural gas to meet energy needs in the future, although it needs to be studied further from the technical aspects of production and commercial aspects. By seeing opportunities in the natural gas industry in Indonesia, PT. Rindu Laut Jaya determines a new business scope, namely funding cooperation. Therefore, the company initiate to make an investment for Liquefied Natural Gas (LNG) project. Liquefied Natural Gas (LNG) is one type of gas traded in Indonesia, which makes LNG superior to Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) due to its non-toxic, non-corrosive, environmentally friendly and efficient combustion. With the increasing in utilization demand and demand of natural gas in Indonesia, business opportunities in the natural gas sector are promising in the future. Therefore, to support the business interests of an LNG project, investment analysis, and risk analysis needs to be done to improve performance and anticipate risks that can disrupt the stability of the business. The purpose of this study is to analyze the investment using the capital budget method on the project. The methodology used in this study is the capital budgeting, such as: Net Present Value, Discounted Payback Period, Payback Period, Internal Rate of Return, Profitability Index, and Return on Investment. Sensitivity analysis simulated with four parameters independents variables, namely: inflation rate, quantity sold realization, price per unit realization, and fixed cost with variance -20% and +20%. Monte Carlo simulation identify the probability and fluctuation in revenue on this project, these simulation was conducted in 10.000 iteration. The results of this study conclude that project development, operational activities, and retail activities with a project duration of ten years, the project needs investment costs of € 25,278,080. Based on the calculation of investment analysis the project produces a positive NPV value of €11,998,314, a discounted payback period for seven years, a payback period of six years, an Internal Rate of Return of 31.006%, a Profitability Index of 1.429 and a Return on Investment of 45.614%. The most key parameter in sensitivity calculation is price per unit realization and price per unit variable cost realization. By taking two indicators which are price per unit realization and quantity sold realization in Monte Carlo analysis, the revenue result has certainty 45%-50% to get €72,553,424 revenue value. Minimum revenue value result is €9,652,004, while maximum net profit value is €112,638,982. Based on the result, Liquefied Natural Gas (LNG) project is feasible.