FEASIBILITY STUDY OF DEEPWATER OPERATION BASED ON INDONESIA COST RECOVERY PSC SCHEME
| Main Authors: | Rahardjo, Dhimas Wicaksono Pinto Pudji; School of Business and Management, Institut Teknologi Bandung, Sukarno, Subiakto; School of Business and Management, Institut Teknologi Bandung |
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| Format: | Article info eJournal |
| Bahasa: | eng |
| Terbitan: |
The Indonesian Journal of Business Administration
, 2022
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| Online Access: |
https://journal.sbm.itb.ac.id/index.php/IJBA/article/view/4439 |
Daftar Isi:
- Nakor Energi Indonesia (not the real name) is responsible for the deepwater operation at Bratasena Field, originally finished by January 2020. Since 2017 Nakor has decided not to continue this operation in the Bratasena Field because it is not economical. Eleven jobs were canceled. However, in December 2019, the Government of Indonesia sent an inquiry to Nakor Energi to continue Bratasena Field’s operation until December 2027. The request’s background is because two big gas producer wells from that nearby field are currently utilizing the production facility at Bratasena.Nakor is trying to perform the feasibility study for all the projects that were canceled before. The analysis started by collecting all the important data like oil production data, capital expenditure estimation, and uncertainty analysis related to the project execution. Cost Recovery PSC payment scheme and Discounted Cash Flow model are used to evaluate the investment. The final result will be simulated with sensitivity analysis to measure each cost component’s impact on the investment calculation.Based on the analysis and calculation, by using the average of oil prices of US$ 45.81 per barrel, capital expenditure of US$ 49 million, and operating expenditure of US$ 46 million, this project generates a net cash flow of US$ 2.1 million. Nakor has the WACC of the company at 10%. This deepwater project gives the NPV of US$ 1.5 million, IRR of 48%, PBP for 12.06 months, and DPI of 1.13. Even though this project generates value for Nakor, the DPI of 1.13 does not meet the minimum economic hurdle from Nakor Oil Corporation.Nakor Energi Indonesia should divert the budget schedule to any other more feasible project, probably in their land operation with fewer risks and complexity for the current situation. The Bratasena Field can be kept as is and continue supporting gas production from Bongka Field while producing oil and gas from current online wells. Nakor Energi Indonesia might offer the deepwater operation to another offshore operator if there is any interest from other companies. Suppose there is no other company interested in taking over this field. In that case, Nakor Energi might start the wells’ permanent abandonment by utilizing the approved Asset Site Restoration budget for the wells without any future utilities and preparing the decommissioning process for this field to Indonesia’s Government.Keywords: Production Sharing Contract, Feasibility Study, Oil and Gas Deepwater Operation