Oil and gas sector in Indonesia has been the strong pillar for the economy of the country, the income from oil and gas sector has provided more than 15% in average of the revenue for the government. However, starting in 2015, the oil and gas sector's contribution to the country revenues has decreased significantly from 14.11% in 2014 to 4.46% in 2015. Companies that engaged in this sector are struggling to survive. The most problems faced by companies in this field are the decrease in resources and also the increase in operational cost. PT XYZ ("XYZ") as a subsidiary of one state-owned company that specialized in the gas distribution and natural gas industries also impacted by this condition. The revenue ofXYZ decreased from USD 2,896 million in 2014 to USD 2,571 million in 2015 and to USD 2,499 million in 2016. In 2016, XYZ has an option whether to install the existing pipeline which is steel pipeline, polyethylene pipeline or polyamide pipeline system for the future project. The objective of this study is to choose and decide which option generate the most cost efficiency forthe company. The object of the project location is in Greenland International Industrial Center ("GIIC") and the primary data were collected in year 2016. The capital budgeting model used to analyze the data and the Clitelia or indicator that used for capital budgeting model are (I) Payback period; (2) Return on Investment; (3) Net Present Value; (4) Profitability Index (5) Discounted Payback Peliod; (6) Internal Rate of Return.

Supervisor: Dr. Wiwiek M. Daryanto, SE-AK, MM, CMA