Financial Feasibility Study of Methanol Refinery from Natural Gas Plant Project using Monte Carlo Simulation

Indonesia has abundant natural resources, one of which is natural gas. Utilization of the large demand for natural gas in Eastern Indonesia through the construction project of a methanol refinery is a solution to substitute methanol imports in Indonesia. One of the biggest challenges in building a methanol refinery in Indonesia is a project that meets the economic feasibility indicator. In the methanol refinery project, it is also possible to accommodate the uncertainty variable that raises the possibility of facing the actual risk under the expected return such as investment costs, natural gas prices, and the selling price of methanol. Therefore, an economic method is needed that is not able to accommodate the possibility of the occurrence of these uncertain variables, one of which is the deterministic method and the probabilistic Monte Carlo. This research will focus on the economic feasibility of the methanol project using the deterministic method and the probabilistic Monte Carlo calculation through the Free Cashflow calculation in accordance with the principles of project finance. The feasibility of deterministic and probabilistic economic in this study uses Microsoft Excel 2016 and Crystal Ball 11.1.2.4 applications. The indicators used by the deterministic method in this study are NPV>0, IRR>10%, PBP1, and probabilistic feasibility test indicators, Average Cumulative Probability of Feasibility Test Parameters >70%. The results showed that the deterministic and probabilistic project economic methods met the specified criteria. The three uncertainty variables that most influence the economic model using the Monte Carlo probabilistic method are methanol prices, gas prices, and CAPEX.