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The oil spill at Balikpapan Bay in Indonesia's East Kalimantan province has not impacted operations at PT Pertamina's 260,000 b/d Balikpapan refinery in the vicinity, a spokesman for the national oil company said Friday.

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"It is unaffected," Yudi Nugraha, the spokesman at Pertamina's Kalimantan unit confirmed by phone, without providing further details.

Pertamina's underwater crude oil pipeline that connects the Lawe-Lawe oil terminal to the Balikpapan refinery developed cracks on March 31, resulting in an oil spill that covered 7,000 hectares and caused the deaths of at least five fishermen, according to a statement from the environment ministry.

The pipeline is located at a depth of 25 meters near the port city of Balikpapan on the island of Borneo.



The oil spill had initially forced the Balikpapan refinery to slow operations but it has since returned to normal operating levels, a person with direct knowledge of the situation, who declined to be named, said. This could not be confirmed by the refinery.

Separately, a Singapore-based sweet crude trader who participates in the Indonesian crude market said Pertamina has not been seen offering any oil cargoes in the spot market since the oil spill.

While concerns of reduced runs at the Balikpapan refinery have abated, traders are still monitoring the situation and its overall impact on crude demand and prices.

The Balikpapan refinery usually takes delivery of a few VLCCs of oil a month, mostly of West African crude grades, which could be negatively impacted in the event of a disruption.

Fuel supply from the Balikpapan refinery also remained unaffected, Indonesia's Energy and Mines Ministry said late Thursday in a statement, indicating that the refinery was processing its crude stockpiles.

Pertamina used a 16-inch pipeline that was connected with the facility to replace the 20-inch damaged pipeline, Indonesia's newly appointed oil and gas director general Djoko Siswanto said.

Siswanto said the incident was caused by a Panama-flagged coal vessel's anchor that got caught on the underwater pipeline, causing it to drag on the sea floor and crack. The oil spill has been stopped but the cleanup is continuing, he said.

Pertamina has deployed a vacuum truck along with an oil boom and oil spill dispersants to control the oil spill, Nugraha said in a statement Thursday.

Local media reported that the administration of Balikpapan city has declared a state of emergency over the oil spill. Online images showed plumes of toxic smoke several meters high after the oil spill caught fire.

-- Anita Nugraha, newsdesk@spglobal.com
-- Andrew Toh, andrew.toh@spglobal.com
-- Eric Yep, eric.yep@spglobal.com
-- Edited by Wendy Wells, newsdesk@spglobal.com