FINANCIAL FEASIBILITY ASSESSMENT FOR PT ABC LNG PRODUCTION FACILITY EXPANSION PLAN
PT ABC LNG is an LNG producer that has been producing a reliable LNG for its customers since 2013. Initial GSA with upstream parties is set to be expired in 2026, however, recent development indicates that upstream parties have secured PSC extension for another 20 years. Considering this devel...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/72726 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | PT ABC LNG is an LNG producer that has been producing a reliable LNG for its customers since 2013. Initial GSA with upstream parties is set to be expired in 2026, however, recent development indicates that upstream parties have secured PSC extension for another 20 years.
Considering this development, PT ABC is considering an opportunity to secure a long-term gas supply that enables production capacity expansion which will create additional revenue and improve plant reliability. A technical feasibility study has been performed and 2 options with estimated construction time of 30 months are considered feasible. This final project aims to provide a financial feasibility assessment of the production capacity expansion project with capital budgeting and risk assessment technique.
Capital budgeting analysis using base case scenario indicates that both options will provide additional value to PT ABC with an estimated NPV 52.1 MUSD, IRR 20.57%, DPBP 9.4 years, and PI 1.52 for Option 1, and estimated NPV 117.8 MUSD, IRR 28.77%, DPBP 8.62 years, and PI 2.68 for Option 2. However, this study also found that some variables are affecting the project financial feasibility significantly, such as LNG and feed gas price, plant availability, Capex realization and long-term debt interest rate. Monte Carlo simulation shows that the project has a probability of success (NPV > 0) of 54.24% for Option 1 and 65.80% for Option 2. Securing a long-term SPA initiative could allow for a higher debt ratio (~68%) financing which could improve the NPV of the project by 4-9%. Further study on CCUS could also be explored further to provide additional competitive advantage when the carbon credit law in Indonesia is more established.
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