Balikpapan, the Heart of the National Oil and Gas Industry
Balikpapan is known not only as the Oil City, but also as the center of the national energy industry. Since the Dutch colonial era, the city has been a strategic location for oil and gas exploration activities, now managed by PT Pertamina (Persero) and other international oil and gas companies. Along the coast of Balikpapan Bay are refineries, fuel terminals, energy ports, and supporting industrial areas such as Kariangau and Manggar.
With major projects like the Revitalization of the Pertamina Balikpapan Refinery (RDMP Balikpapan Project), the activity of contractors, vendors, and service providers has increased rapidly. This multi-billion dollar project involves thousands of workers, heavy equipment, and complex infrastructure operating 24 hours a day.
However, behind the grandeur of these projects, there are significant risks that can threaten safety, project sustainability, and company finances. This is where sound risk management is crucial—and the role of professional insurance brokers like PT. Liberty and General Insurance Broker (L&G) becomes vital.
Why the Oil and Gas Sector in Balikpapan and East Kalimantan is High Risk
Oil and gas activities in East Kalimantan encompass exploration, production, processing, distribution, and transportation. Each stage carries different potential risks:
- Operational risks: fire, explosion, oil spills, and work accidents.
- Construction risks: structural damage during construction of pipelines, tanks, or refinery facilities.
- Environmental risks: marine and land pollution which can have legal implications.
- Financial risks: project delays that trigger fines and claims between parties.
For example, in the Balikpapan RDMP project, every contractor is required to have insurance protection such as Construction All Risks (CAR), Third Party Liability (TPL), and Workmen Compensation Insurance (WCI).
The goal is not only to meet Pertamina’s requirements, but also to maintain project sustainability and the company’s financial stability.
Local Case Study: When Risk Becomes Real
In recent years, several incidents in the Balikpapan area have shown how risks can have a major impact:
- A small fire in the Balikpapan refinery project area temporarily halted construction activities for two weeks.
- Contractors who have a CAR policy are immediately compensated for repair costs and lost time.
- However, sub-vendor contractors who do not have protection must bear the losses themselves.
- A work accident at an oil pipeline project in Bontang resulted in serious injuries to two workers.
- With the support of a Workmen’s Compensation policy, all medical expenses are covered, and the worker’s family receives full compensation.
Project delays due to crane damage at Kariangau port triggered claims between parties.
Only contractors who have Third Party Liability Insurance can protect themselves from lawsuits.
These cases illustrate that without proper risk management and insurance protection, business continuity in the oil and gas sector can be severely disrupted.
Types of Risks and Insurance Relevant to Oil and Gas Projects
- Construction All Risks (CAR) dan Erection All Risks (EAR)
Protecting construction projects and equipment installation against physical risks such as fire, explosion, or work accidents.
This policy is mandatory for main contractors and subcontractors in Pertamina oil and gas projects.
- Third Party Liability (TPL)
Provides protection against third party claims resulting from property damage or injuries occurring during the project.
For example, if heavy equipment hits a fence or vehicle belonging to an outside party.
- Workmen’s Compensation Insurance (WCI)
Providing compensation to workers who experience work accidents.
In large projects such as Pertamina refineries, compliance with labor protection is a top priority.
- Professional Indemnity dan Contractor’s Plant & Equipment (CPE)
For consultants and heavy equipment providers, these two types of insurance protect against claims for professional errors and damage to work assets.
- Environmental Liability
It is very important for oil and gas projects that are close to the sea or rivers, such as in Balikpapan Bay.
This policy covers cleanup costs and legal liability resulting from pollution.
The Vital Role of Insurance Brokers in Oil and Gas Projects
Managing risks in the oil and gas sector cannot be done with a general approach.
Each project has different technical, contractual and regulatory complexities.
This is where the role of insurance brokers like PT. Liberty and General Insurance Broker (L&G) becomes crucial.
Insurance brokers not only sell policies, but:
- Analyze project risks thoroughly, including location, work methods, and potential hazards.
- Designing a suitable insurance program, involving various types of policies from trusted insurance companies.
- Negotiate the best premiums, as brokers have access to many national and international insurances.
- Assistance during claims, ensuring a fast and transparent process.
With the support of experience in the national oil and gas industry, L&G has handled various large projects — from engineering and fabrication to the delivery of heavy equipment for refineries and fuel terminals in East Kalimantan.
Challenges Faced by Contractors in Balikpapan and East Kalimantan
Despite the huge business opportunities, local contractors face a number of serious challenges:
- Competition with more experienced national and foreign contractors.
- Lack of understanding of risk management and contractual obligations.
- Many people buy policies directly without review, so the protection does not match the project’s needs.
A real example, several vendors working on projects at the Lawe-Lawe Terminal, North Penajam Paser, experienced difficulties when making claims because they did not have assistance from a broker.
In contrast, L&G clients facing similar cases have achieved claim settlements in a relatively short time due to comprehensive documentation and professional negotiations.
How Technology Makes Brokers More Efficient and Closer
With the advancement of technology, the distance between Balikpapan and Jakarta is no longer an obstacle.
L&G Insurance Broker has developed a digital system that allows clients to:
- Online consultation via video meeting.
- Get quotes and policies in e-policy format.
- Monitor claims through a digital dashboard.
Now, contractors in Sangatta, Bontang, and Kutai Kartanegara can get brokerage services at the same speed as those in the capital.
Digitalization makes L&G services fast, transparent, and accessible.
Benefits of Using an Insurance Broker in Oil and Gas Projects
- Assurance of protection: every project risk is clearly mapped and protected by an appropriate policy.
- Premium cost efficiency: brokers negotiate the best prices without sacrificing protection.
- Claim certainty: accompanied by a team of experts from the beginning until payment.
- Project credibility: companies that have professional risk management are more trusted by Pertamina and investors.
- Peace of mind: management can focus on completing projects without worrying about financial risks.
Building a Risk Management Culture in the Oil and Gas Industry
The success of the oil and gas industry in East Kalimantan depends not only on technology or capital, but also on risk management discipline.
Every contractor, vendor, and service provider must understand that risk is part of operations — not something to be ignored.
L&G actively educates industry players in Balikpapan and its surroundings through workshops, consultations, and direct mentoring.
The goal is to create a resilient and sustainable business ecosystem, where every party is prepared to face risks with adequate protection.
Conclusion: Don’t Ignore the Risks, Protect Your Business Now
Oil and gas projects in Balikpapan and East Kalimantan bring both great opportunities and high risks.
Every contractor and service provider is obliged to ensure that the existing risks are properly understood and protected.
Use the services of PT. Liberty and General Insurance Broker (L&G) — a professional insurance broker with extensive experience in the energy sector and national strategic projects.
With its extensive network, in-depth analytical capabilities, and modern digital services, L&G is ready to be your trusted partner at every stage of your project.
📞Contact L&G Insurance Broker today for a free consultation on risk management and a review of your insurance policy.
Because in the world of oil and gas projects, success is not just about building, but also about protecting.
