INVESTMENT EVALUATION OF LEASE PURCHASE FLOATING PRODUCTION UNIT PROJECT

• Main Author: Mudafi'ulhaq, Muhammad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/56003
• Institution: Institut Teknologi Bandung

ADM and HBM is well block under concession of PT. HCL, initially the block was planned to produce gas in 2019, which the design concept of production facility is using a floating production unit .These two blocks are estimated to contain 300 BCF natural gas and to be exploited 150 MMSCFD within 10 years period. The tender process of FPU supply was done in 2016, unfortunately the project progress is delayed due to uncertainties, and it is likely to be retendered in near future. One of many conditions to be considered is the project requires build operate transfer schematic, in after 10 years operation period the FPU should be retransferred to the project charterer for $1. Therefore the investment decision should be based on project economic parameters. Moreover, PT. TUS must through a competitive tender selection process prior to getting the letter of award, thus the bidding value submission must be carefully calculated. To measure business conditions, the PESTLE framework is used to analyze the effect of external factors to the business environment, while to measure the attractiveness of upstream oil and gas businesses, the framework of Porter’s Five Forces is performed. On the other side, the internal analysis of firm ability is using the VRIO framework to identify the level of the sustainable competitive advantage. The economical evaluation is using capital budgeting methodology, with assumption tanker based conversion instead of new built vessel, with estimated total gross revenue 386,900,000 USD during 10 years period, the project will generate NPV 5,376,670 USD, IRR 24% and payback period in 7.2 years. However, from the sensitivity analysis if capital and operational expenditure are increased for 15% the project will be default due to DSCR value is less than 1, thus the daily charter rate should be increased to mitigate risk of default.