Indonesia has abundant natural gas resources, however the primary fuel used for electricity generation is coal and oil. Insufficient natural gas infrastructure with-in the country acts as a barrier to increased natural gas usage. In Indonesia LNG is the most efficient and effective method for distributing natural gas given the difficult geographical conditions, the world's largest archipelago and located in a deep sea area. The Government is planning to initiate natural gas imports by 2019 to meet the country's energy demands. In order to allocate adequate amounts of natural gas across the geographic regions Indonesia must build more LNG regasification terminals. The Indonesia government has not yet determined if the additional regasification terminals will be floating or land-based facilities. This paper assesses the two options and identifies which facility attains greater profitability. The financial analysis of investing in the Sorong LNG regasification terminal project is conducted using NPV, IRR, and sensitivity analysis. This analysis demonstrates that FSRU facilities have greater economic viability than onshore LNG regasification facilities. The FSRU project earns greater than a 12% IRR as compared to a negative IRR earned by an onshore project. The government can make the onshore projects viable by increasing the sales fee from US$10.00/MMBTU to US$10.60/MMBTU.
|Number of pages||9|
|Journal||IOP Conference Series: Earth and Environmental Science|
|Publication status||Published - 22 May 2018|
|Event||2018 8th International Conference on Future Environment and Energy, ICFEE 2018 - Phuket, Thailand|
Duration: 10 Jan 2018 → 12 Jan 2018