Balikpapan Refinery Expansion

The Balikpapan refinery located in East Kalimantan, Indonesia is being expanded to increase its crude processing capacity by 40% from 260,000 barrels per day (bpd) to 360,000bpd.

The £3.9bn ($5bn) expansion project will also enable the refinery to produce fuels meeting Euro 5-quality standards.

The Balikpapan refinery that supplies approximately one-fourth of Indonesia’s fuel is one of the six ageing refineries operated by state-owned national oil and gas company PT Pertamina (Persero).

Originally built by Bataafsche Petroleum Maatschappij (BPM), a subsidiary of Royal Dutch Shell, it is one of the oldest refinery sites in the region that commenced operations in 1922.

The Balikpapan refinery expansion project is being executed as part of the Refinery Development Master Plan (RDMP) announced by the Indonesian government in 2013.

The refinery expansion project is being implemented in two phases with phase one scheduled for completion in 2023 and phase two in 2026.

The Refinery Development Master Plan (RDMP)

Indonesia’s RDMP programme envisages the expansion of five existing refineries in the country including Cilacap (Central Java), Balongan (West Java), Dumai (Riau), Balikpapan (East Kalimantan), and Plaju (South Sumatra).

The programme was aimed at increasing the country’s total crude processing capacity from the current capacity of 1.1million barrel per day (Mbpd) to 2Mbpd by 2025 and enabling the country to meet its entire fuel demands domestically by 2026.

The Balikpapan refinery expansion project is the first project under the RDMP programme to have entered the construction stage.

Location and site details

The refinery is situated on a 2.5km²-site along the Balikpapan Bay on the Borneo Island, in the East Kalimantan province of Indonesia, approximately 1,000km to the northeast of Jakarta.

Infrastructure facilities

The Balikpapan refinery facility comprises seven integrated components including a crude distillation unit (CDU), a high vacuum distillation unit (HVU), a hydrocracker unit, a reformer unit, a naphtha treater, a gasoil treater, and a liquid petroleum gas (LPG) recovery unit.

Balikpapan refinery expansion  details

The refinery’s crude processing capacity will be increased by 100,000bpd to 360,000bpd in phase one of the refinery expansion project, while phase two will involve the installation of process equipment for the production of fuel complying Euro 5-quality specifications. The expansion project includes the installation of a 90,000bpd residual fluid catalytic cracker (RFCC) unit, an LPG sulphur removal unit, a propylene recovery unit, a crude distillation unit (CDU) and an 80,000bpd middle distillate hydrotreater.

After the expansion, the diesel production capacity of the refinery is expected to be increased by 30,000bpd, while the annual polypropylene production capacity is expected to be increased to 230,000 tonnes (t).

A total of 17 new reciprocating compressors to be used in different refinery processing units of the plant, along with a single-stage, hot gas expander to produce 20MW of power by recovering waste heat from the RFCC reactor, will be installed as part of the expansion project.

Four SGT-800 industrial gas turbines and five SST-600 steam turbines from Siemens will also be installed for power generation to support the refinery expansion.

Financing

Pertamina signed a £1.2bn ($1.5bn) loan agreement with the South Korean Eximbank to finance the Balikpapan refinery expansion in July 2019.

Contractors involved

Siemens Gas and Power was contracted to supply 17 reciprocating compressors, including eight HHE-VL, two HHE-FB, four HHE-VG, and three HSE compressors, as well as a single-stage, hot gas expander, and four industrial gas turbines and five steam turbines for the Balikpapan refinery expansion project in May 2020.

A consortium of Hyundai Engineering and SK Engineering & Construction including local companies PT Rekayasa industry and PT Pembangunan Perumahan was awarded a turnkey engineering, procurement, and construction (EPC) contract worth £1.7bn ($2.17bn) for the refinery expansion project in September 2019.

WorleyParsons was awarded the project management consulting (PMC) contract for the EPC packages of the project in August 2018.

Bechtel International was engaged to carry out the front-end engineering design studies for the refinery expansion.

Technology partners

Air Liquide Engineering and Construction was selected to provide license and basic engineering for a hydrogen production unit and a 120,000 m3/h steam methane reformer (SMR) unit at the refinery in November 2018.

Pertamina contracted Honeywell UOP to provide technology licensing and engineering design for a 33,000bpd continuous catalyst regeneration unit as well as a 47,000bpd hydrocracking unit at the refinery in 2017.

Pertamina signed technology licensing agreements with Axens to upgrade residue into gasoline at the Balikpapan refinery in October 2016.