Strategic Management Analysis of Gas Supply During Turn Around: Lending and Borrowing Agreement at PT X
Maria Diansari (a*), Athor Subroto (a)

a*) Magister of Management, Faculty of Economic and Business, Universitas Indonesia
Jl. Salemba Raya No.4, RW.5, Kenari, Kec. Senen, Kota Jakarta Pusat, Daerah Khusus Ibukota Jakarta 10430
maria.diansari[at]ui.ac.id

Abstract

PT A, one of gas buyers of PT X, asked for gas supply during PT X turn around period which all production facilities of PT X had to be shut down. This study will analyze the strategic management undertaken by PT X in order to meet the demand for gas supply. It uses a qualitative approach by conducting interview with related experts, observing documents, and calculating costs and benefits. The results of the analysis show that from three options, namely building a new production facility, borrowing resources, and buying a company or acquisition, PT X chose to borrow resources. Based on the cost and benefit analysis of three scenarios, namely scenario 1 do nothing, scenario 2 do nothing but PT A was allowed to absorb gas above its daily contract quantity after turn around finished, and scenario 3 gas lending and borrow, the highest revenue would be earned from scenario 2 but there is a main consideration, PT A really needed gas supply because PT A was not allowed to shut down its production facilities. Based on analysis of the build-borrow-or-buy framework, PT X should choose borrow. The borrow framework is a gas lending and borrowing scenario between PT X and PT Y to fulfill the demand which was legitimated in Lending and Borrowing Agreement (LBA). PT X and PT Y are located in Central Sulawesi and sell the same products, gas and condensate. They also have agreed to implement a sharing facility. That made LBA very possible to conduct. PT Y supplied gas to PT A on behalf of PT X, so PT X still earned revenue. On the other hand, PT Y also earned revenue from condensate production. After successfully implement the LBA during the turn around, PT X and PT Y agreed to create a long-term LBA in order to accomodate unplanned maintenances. LBA between PT X and PT Y is a management strategy that implemented for the first time at the oil and gas industry in Indonesia.

Keywords: Strategic Management, Operation, Lending and Borrowing, Oil and Gas Industry

Topic: Strategic Management and Ecosystem Business