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Continental receives in-principle approval for refinery

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Hydrocarbon Engineering,

The Governor of the Indonesian province of East Kalimantan has granted Continental Energy Corp.’s Indonesian subsidiary, PT Continental Hilir Indonesia (CHI), approval in-principal for the construction and operation of a crude oil refinery to be built at KIPI Maloy, located in the Kutai Timur Regency of East Kalimantan.

The approval includes the company's plan for the Phase-1 construction of a refinery with a capacity of 6000 bpd of crude oil, as well as an associated 10 MW electrical power generation facility utilising heavy fuel oil produced by the refinery, and a tank farm for crude oil feedstock and refined product storage.

The Phase-1 refinery will produce diesel fuel, B30 biodiesel, LPG, naphtha, marine fuel oil, and residual fuel oil for local sale direct to industry, distributors, and consumers within the East Kalimantan region. During this phase, the company has made arrangements with an internationally recognised oil trader to supply imported crude oil to the refinery, until such time as crude oil feedstock can be purchased under long-term contracts from local oil producers within the East Kalimantan Province.

Continental Energy Corp. expects total investment for Phase-1 to be US$50 million and is targeting the end of December 2018 for commissioning and delivering of first refined products. Pre-fabricated modular refinery units sourced from the US, and erected on site, are expected to provide a fast track to realisation of the project in accordance with the Indonesian ‘KLIK’ national policy for facilitating capital investments that involve expedited construction schedules.

Phase-2 of the project will increase the capacity of the refinery to 24 000 bpd and add complex equipment to permit the production of automotive gasoline and jet fuel. Phase-2 is expected to increase the total project investment to US$150 million and produce first refined products by the end of 2020.

KIPI Maloy is a new international port and industrial park built within the Maloy Batuta Trans Kalimantan special economic zone (the KEK-MBTK). The KEK-MBTK is one of eight special economic zones established by the Indonesian federal government to provide comprehensive facilities to domestic and foreign investors.

The company intends to build, own, and operate the KIPI Maloy refinery through PT Kilang Kaltim Continental, a special purpose Indonesian corporation established for foreign direct investment. It is in discussion with several interested financial partners, project funding sources, and lenders located in Indonesia, Dubai, and the US.

Managing Director of the company's CHI subsidiary, Karsani Aulia, said: "We are proud to be awarded this opportunity to participate in the economic growth and development of East Kalimantan and Kutai Timur. The Continental's team's long business experience and technical expertise in Indonesian oil and gas has earned us the trust to undertake this opportunity. We are confident we can make a substantial contribution to implementing the master plan for the region's economic development under the visionary guidance of Drs. H. Awang Farouk Ishak, MM, MSi, Governor of East Kalimantan, and Ir. H. Ismanundar, MT, Regent of Kutai Timur. We expect the KIPI Maloy refinery to be the first of many future Continental projects within this rapidly growing region."

The company’s CEO, Rich McAdoo, added: "The development of our KIPI Maloy refinery represents a long-term commitment by Continental to the Province of East Kalimantan and to the Regency of Kutai Timur. We look forward to being both an active partner and a bridge for other foreign investors to participate in the many other exciting opportunities for commercial developments within these two resource rich and high economic potential regions of Indonesia."

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Downstream news Oil refinery news