South Korea’s Hyundai Engineering said on Monday it has won a project to upgrade an oil refinery located in East Kalimantan Province, Indonesia’s planned new capital, from the country’s state-owned oil and gas company Pertamina PT.

The project calls for plant expansion worth $3.97 billion and the Korean contractor is responsible for $2.17 billion work in it.

The Balikpapan oil refinery is just 20 km away from the site for Indonesia’s planned new capital announced last month.

Hyundai Engineering will upgrade existing oil refinery facilities in the plant and establish new facilities that meet more stringent Euro-Stage V regulations.

The upgrade will increase the refinery`s crude processing capacity to 360,000 barrels per stream day (BPSD) from 260,000 BPSD.

Hyundai Engineering was invited in as the engineering, procurement and construction (EPC) contractor for the construction that is expected to take 53 months to finish.

Including the latest deal, Hyundai Engineering has so far garnered construction orders worth $4 billion in total outside Korea.

The Balikpapan refinery upgrade is one of six mega refinery projects led by the fully state owned oil refiner under its Refinery Development Master Plan for the next several years to increase Indonesia`s fuel production capacity and reduce reliance on imports. Hyundai Engineering said the latest deal represents the first part of Pertamina’s $30 billion project to double its crude processing capacity to 2 million BPSD by 2026.

By Kang Gye-man and Minu Kim

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