Abstract :

The gas industry has had remarkable growth in recent years due to cleaner combustion, and LNG stands at the top of the gas industry as its flexibility and transportability made it an attractive option. Indonesia that has geographical advantage provides natural advantage to become a central player in the global LNG market. However, investment decisions related to new LNG storage facilities are faced with uncertainties and challenges including volatile energy markets, fluctuating LNG prices, geopolitical risks, evolving environmental regulations, and technological changes. This study assesses the feasibility of developing an LNG storage facility in Indonesia. Commercially, it is feasible due to growing LNG demand and Indonesia’s strategic advantages. An LNG storage facility with 180.000 m³ capacity is feasible, showing an NPV of $33.7 million, an IRR of 10.96%, a payback period of 14.61 years, and a Profitability Index (PI) of 1.26. Increasing the tank capacity to 200.000 m³ improves feasibility with an NPV of $44.3 million, an IRR of 11.61%, a payback period of 13.67 years, and a PI of 1.32. Integrating with existing infrastructure further enhances feasibility, yielding an NPV of $77.7 million, an IRR of 14.10%, a payback period of 11.04 years, and a PI of 1.56.

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Keywords :

Capital Budgeting, Investment analysis, LNG, LNG Storage, Monte Carlo Simulation, Sensitivity Analysis.

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