DETERMINING THE BEST ALTERNATIVES BETWEEN BUY OR LEASE OPTION OF HYDRAULIC PUMPING UNIT (HPU) BY EVALUATING COST PERFORMANCE AND PROJECT EVALUATION

• Main Author: Pramana, Yudha
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/67984
• Institution: Institut Teknologi Bandung

The year 2020 was one of the darkest times for world oil and gas companies, because world oil prices had touched their lowest point in the last 15 years. In 2022, it is started to show a change. From PESTEL and Porter Five Forces analysis to get a better view of the current business situation, it was found that there is more positive sentiment than negative sentiment today. One of them is recovery of the world economy after Covid-19 outbreak and coupled with the Russian oil embargo that predicted to make world oil prices will be at a high position for at least the next 5 years. And this is a good momentum and opportunity for all the world's oil companies. When the opportunity is widely open, unfortunately, PT Pertamina EP Jatibarang Field was having problems with not achieving its oil production target. It was found that one of the problems is HPU rental artificial lift showing a decreasing performance in recent years. The root cause was technical problem from the current HPU lessor, founded by using fishbone and FMEA analysis. Because the HPU lease contract will expire in July 2023. Two alternatives are proposed to improve the production performance of the existing HPU well. There is conduct another lease contract with tightened specification of HPU and the other is to buy SRP. The results of the buy vs lease analysis found that the HPU rental price was 7.96% more expensive when compared to the purchase of SRP. The fair value was IDR 3,099.394, the maximum value if the company choose the lease option. If there is no tender participant that offer a lease value lower than that, company should choose buy SRP option. This option will generate NPV of IDR 108,791,789,979 and an IRR of 217%. Based on the results of the risk analysis, the probability of failure of this purchase project was quite low. The probability of NPV < IDR 5 billion is only 0.93%, while the highest probability in the range of IDR 60-160 billion.