Case Study of The Kutubdia Bay NGL Project - Management Assignment Help

Assignment Task:

Task:

All the information based upon this project is purely fictitious and has been prepared for the case study. Any resemblance of asset, corporate entity, location or person included is purely coincidental

Guidance to Students

You are advised to read all the information through VERY CAREFULLY and consult with the faculty member as soon as possible if required.

Background of the case Kutubdia Bay is a small undeveloped port on the south coast of an Asian country and has been selected for the site of a new process plant for Natural Gas Liquids (NGL) which will be supplied by offshore production platforms. After the gas is separated from oil on the platforms offshore, the gas will be pumped ashore in a pipeline close to a new marine terminal at Kutubdia Bay. From there it will be piped two kilometers to the new NGL Plant where firstly the methane will be separated from the rest of the gas product. The methane will then be sent to a neighboring national grid plant, leaving the remaining NGL to be processed further. The ethane will then be piped to an adjacent ethylene cracker plant for further processing and cracking. The propane and butane will be chilled, liquefied and stored on site within double integrity tanks. The gasoline will also be stored on site within floating roof tanks. All these liquids will then be piped back to the new marine terminal for loading onto ships for export. The national Government, represented by the Minister of Energy and other officials were extremely keen on the NGL project. Part of this was due to the fact that the project was estimated to generate more than 400 local jobs plus the creation of at least the same number indirectly in local support services and supplies. They were also anticipating considerable tax revenues once the NGL plant was in production. The Government knew that they did not have the expertise locally to build and operate the plant. However, at the end of a five-year operating period, ownership of all the project assets would revert to the Government, at which point they would expect their own nationals to take over and operate the entire plant. In essence the Government’s vision was to create a sustainable long-term plant, set up using foreign know-how and capital, but with long term benefits for their own citizens.

Project background

When the opportunity was publicized, several International Oil Companies (IOCs) were interested and the Government invited all interested parties to visit and assess the opportunity, with a view to developing all the necessary infrastructure at the site. After several months of negotiations, the exclusive rights to the Kutubdia Bay project were secured by an American oil company, Nevada Petroleum Inc (NPI) that paid the government a one-off fee of US$10m for the site development license. The overall project work scope included the construction of a processing plant, roads and port improvements to accommodate deep water freight vessels. The construction of improved local housing, roads and social infrastructure in the area was also stipulated by the Government as part of the overall project scope. This extra work, intended to provide housing and other services for workers and local people, was evaluated, costed and integrated into the scope of the project by NPI In addition to the $10m licence fee paid in advance, the Government (represented by the Minister of Energy) also demanded a special tax representing 25% of the annual operating profits generated by the plant once the entire site commenced production. NPI agreed to pay this tax but were careful to ensure that terms were written into the licence agreement that this would only be payable after all their licence, capital and operating costs had been recouped. In other words, the tax would only be payable when the project generated a surplus. Although NPI had no operating experience in Asia, the general consensus in the company head office at Carson City, Nevada was: how hard could it be? They had many years of refining and NGL processing experience in remote areas of the United States, Canada and Mexico. And the daily operating capacity at Kutubdia would be relatively small in comparison to some of their existing plants

The project business case

During the licence negotiations, intensive analysis was carried out by NPI economists. The plant was originally designed to operate using a single process module with a total capacity of approximately 600 tonnes per day. The plant was expected to be in production for 250 days each year, the remaining days being set aside for planned maintenance, repairs and upgrades. The anticipated operational life of the Kutubdia Bay processing plant by NPI would be five years before the Government assumed ownership. Prior to production starting, all the infrastructure design, construction and commissioning work was estimated to take no longer than 12 months. At the time of this economic analysis, NPI expected to achieve a return (profit) of at least $740 per tonne. The full cost of constructing the project was first estimated by consultants as being no more than $160m plus a contingency of 10%

The above  Management  Assignment has been solved by our  Management Assignment  Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.