INVESTMENT DECISION ANALYSIS OF BONTANG LNG HUB PROJECT
PT Badak NGL (“BADAK LNG”) has been producing LNG since 1977 which production is depended on the amount of feed gas available in the region. It is estimated a trend of decreasing feed gas supply for the existing liquefaction plant which deficit will occurs in 2026. As the result, the existing 6 u...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/69928 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | PT Badak NGL (“BADAK LNG”) has been producing LNG since 1977 which production is
depended on the amount of feed gas available in the region. It is estimated a trend of decreasing
feed gas supply for the existing liquefaction plant which deficit will occurs in 2026. As the
result, the existing 6 units LNG storage tanks, with a total capacity of 600,000 m3, and jetty
facility are foreseen to be under-utilized starting 2026. Therefore, Badak LNG have the
intention to convert the existing export terminal into LNG receiving and hub terminal (“LNG
Hub Project”) as new business unit.
Market canvasing in 2019 indicated good response from potential users in both domestic and
international companies through their submission of expression of interest. Evaluation based
on each respective users tariff and demand indication is required in order to assess the feasibility
of the project. Badak LNG internal data such as existing liquefaction process road map, project
road map, and conceptual design report, will be combined with external data such as
benchmarking data (PGN financial history), potential user’s demand, and historical data to
develop a financial model as the tool used to assess this project.
A minimum tariff and demand volume scheme should be implemented to both domestic and
international user in order to achieve IRR at 16.32%, NPV at USD. 47,462,057, profitability
index at 3.39, and payback period at 8.9 years. Specifically for international user, 70%
minimum demand and USD. 0.26/MMBTU minimum tariff should be implemented as these
components are the most sensitive factor in this project.
Management of Badak LNG should consider a comprehensive project risk assessment and
update to cost component with greater accuracy to this project and incorporating the result into
this financial model accordingly.
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