This study seeks to: a) demonstrate the need to analyze gas projects as an integral system; b) describe an integrated cash flow modeling approach for gas projects which can be used to determine the returns to various parties under different parameters and perform sensitivity analysis; and c) finally provide a practical tool to help governments negotiate gas contracts. While most cash flow models analyze the production sharing contracts (PSC) terms separate from the power plant economics, this study is an attempt to model gas exploration and production, distribution, power generation, and government cash flows as an interconnected system. The advantage of looking at an integrated cash flow model compared with mutually exclusive models for each of the above activities is the ability to analyze the impact of PSC terms, distribution tariffs, and power generation profitability on the electricity tariffs. This cash flow model would also be useful in determining the economic and financial viability of the exploration and production, distribution and power generation, and in determining negotiating boundaries for gas prices and PSC terms. The results of two case studies of Vietnam and Philippines indicate the power of the model in helping negotiate terms in the integrated gas chain.
