Abstract :

The global oil refinery industry faces challenges such as crude oil price volatility, environmental awareness, and renewable energy trends. Indonesia’s oil consumption is increasing, reaching 1580 million bpd in 2022, but the country heavily relies on imports for domestic demand. The petrochemical industry, crucial for the downstream plastic industry, is forecasted to grow at a 5%-6% rate between 2022 and 2031. However, domestic production capacity is lower than demand, and Indonesian manufacturers are few. PT ABC, a joint venture between Indonesia’s State Own Enterprise and European oil and gas companies, plans to build the first integrated oil refinery and petrochemical complex in Indonesia. This integration will provide economic benefits by sharing feedstocks, products, and utilities, and saving energy costs. However, significant capital investments are required. The research is performed to analysis the feasibility of the capital investment project and to evaluate potential source of fund to finance the project, such as shareholder’s equity, bank loans, and corporate bond. The research will determine the NPV, IRR and Payback Period of the project and compare it from different source of funds. The research performed also evaluate several factors that could influence feasibility of the project. As the result, it shows that at discount rates of 8%, 10%, and 12%, the project is feasible. However, volatility of the crude oil price will give significant impact to the project’s feasibility. In addition, it also recommends PT ABC to choose a mix financing between international bank loans and shareholder’s equity at a 60:40 ratio.

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Keywords :

Feasibility Study, Integrated Complex, Oil Refinery, Petrochemical, Project financing

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