BUSINESS STRATEGY TO INCREASE ECONOMIC VALUE IN MARGINAL GAS PROJECT IN DYNAMIC ENVIRONMENTS FOR GAS PROJECT DEVELOPMENT PT. CITRA DAMAR ZONE (CDZ)

• Main Author: Nugraha Hanafie, Agung
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/47799
• Institution: Institut Teknologi Bandung

As a National Strategic Project (Project Strategis Nasional), Jaya Terus Berjuang Unitization Gas Field Development Project (JTB Project) has been through a long journey. It began with the discovery of Jaya Gas Field by BCL in 2001 at working area of Cair Block and later the discovery of Terus Berjuang Gas Field by CDZ WP at working area of CDZ WP in 2010. In 2010, it was discovered that Jaya Field reservoir (a hydrocarbon field in Cair Block working area) was spread to Terus Berjuang Field (a hydrocarbon field in CDZ WP working area). In accordance with Government Regulation (PP) No. 35 of 2004 concerning Upstream Oil and Gas Business Activities, the PSC must carry out unitization if it is proven that the reservoir is spread to other PSC’s working area. In early 2017, through letter of the Minister of Energy and Mineral Resources on the Development of Jaya-Terus Berjuang Field stated PT Citra Damar Zone (CDZ) to fully execute the development of the Jaya-Terus Berjuang field and to take actions to resolve the rights and obligations through Business to Business with related parties, as well as other necessary steps. Based on statement above, CDZ as new-appointed operator of Jaya Terus Berjuang Gas Development Project need to calculate the project economics based on techno-commercial feasibility as part of company’s business strategy. This study will focus on strategic option for commercial, especially how to address strategic solution for execute JTB project to contribute to more value to stakeholder. Volatilities and tight negotiation between ex operator BCL and government increase uncertainty factor of this project. Long process of the negotiation takes much effort and consuming more time and impact project schedule, while parallel this project is hold by operator. Delay of the project would impact delay of the gas on-stream in the future. The project values of economics in dynamic environments tends to decrease due to marginal economic values. These found as a main problem and threat for CDZ’s business sustainability, also a threat for domestic gas supply and demands in Java. Based on current factor above, economic profile of the project become marginal and very sensitive to the project parameter such as, gas production, capex, opex and project delay. Is this project feasible to commence? CDZ need breakthrough to increase economic project performance and supporting initiatives to increase feasibility of the project. To perform the right business strategy implementing techno–commercial feasibility, author will conduct Qualitative Analysis and Quantitative Analysis which compare high level data of project feasibility analysis include Capital expenditure, Operational expenditure, Net Present Value (NPV), Internal Rate of Return (IRR). Summary of the result would present by combining 2 approaches above and further reviewed by Decision Tree Analysis to get best option for execute best strategic action for executing JTB project. Author hopes recommendation and analysis from this study can applied for major typical project that has marginal economic value and limited by tight schedule, especially for oil and gas project that has unfavourable trend due to volatility of oil price.