Unit Transportation Cost Index for Decommissioning Offshore Platforms in Malaysia

Decommissioning of offshore installations presents a major liability due to the complexity in a sensitive environment as well as the huge sum of money involve in its operations. Therefore, an appropriate cost planning of decommissioning is needed. This study is aimed at developing a site specific unit cost index pertaining to year of decommissioning offshore platform. In particular, this study will focus on the transportation aspect of decommissioning of offshore platform because it contribute high percentage in cost of decommissioning. Laspeyres index formulas were used to compute a series of years from 2009 to 2013 for unit transportation cost index. With a series of cost index, the rate of inflation for the transportation were predicted based on the previous data. Analysis and interpretation on the price level is discussed in this report. The inflationary trend is used to project the upcoming price level. In conclusion, cost index is very useful in planning the decommissioning of offshore platform installation and more importantly it also helps in producing reliable cost estimation. For future research, it is recommended to have a series of inflationary trend on transportation for at least more than 10 years to obtain accurate projection of price level. In addition, this research study can initiate another set of unit cost index for different cost element for decommissioning such as equipment. It has also been recommended that, further research should be conducted to establish cost index for the whole platform.