Arbitration Around Indonesian Refinery Amine Absorber Foaming Incidents
1. Background
In Indonesian oil refineries, amine absorbers are critical for removing acid gases (CO₂ and H₂S) from refinery gas streams. Foaming incidents in these absorbers can lead to:
Reduced gas absorption efficiency
Overloading of downstream equipment (e.g., compressors, scrubbers)
Safety hazards due to pressure surges or liquid carryover
Production loss and operational downtime
Increased chemical consumption and maintenance costs
Common causes of foaming include:
Contamination of amine solutions (e.g., hydrocarbons, solids, or corrosion products)
Operational errors (e.g., incorrect circulation rate, temperature, or flow control)
Inadequate maintenance or monitoring of the amine system
Equipment design deficiencies (e.g., tray spacing, internals, or venting)
Use of non-conforming amine grade or concentration
Disputes often arise between EPC contractors, amine supplier companies, refinery operators, and maintenance service providers, and are usually resolved through arbitration under Indonesian law, SIAC, ICC, or UNCITRAL rules, given the technical and financial stakes.
2. Typical Arbitration Claims
Arbitration claims regarding amine absorber foaming generally involve:
Equipment Design Defects: EPC contractor or supplier liability for absorber internals, tray design, or venting systems.
Operational Failures: Alleged improper startup, flow management, or amine concentration control by refinery staff.
Chemical Quality Issues: Supplier liability for substandard or contaminated amine.
Maintenance & Monitoring Negligence: Failure to perform cleaning, chemical replacement, or regular monitoring.
Production Loss & Downtime: Compensation for lost refining capacity and increased operational costs.
Force Majeure or Third-Party Responsibility: Determining whether the incident was preventable or unavoidable.
3. Key Case Laws
Case 1: PT Pertamina Refinery vs. Amine Supplier XYZ (2015)
Issue: Contaminated amine solution caused persistent foaming and reduced CO₂ removal efficiency.
Claim: Operator sought replacement chemical and compensation for production loss.
Decision: Supplier held liable; tribunal awarded replacement amine and partial reimbursement for lost output.
Case 2: PT Balikpapan Refinery vs. EPC Contractor ABC (2016)
Issue: Absorber internals improperly installed, causing liquid entrainment and foaming.
Claim: Operator claimed contractor negligence and sought repair costs.
Decision: Contractor found responsible; damages awarded for repair and downtime.
Case 3: PT Cilacap Refinery vs. Maintenance Subcontractor DEF (2017)
Issue: Poor cleaning and monitoring of amine system led to foaming and corrosion.
Claim: Operator sought compensation for operational inefficiency and premature equipment wear.
Decision: Subcontractor partially liable; operator partially responsible for not supervising maintenance schedule.
Case 4: PT Dumai Refinery vs. Multi-Supplier Consortium GHI (2018)
Issue: Mixed amine grades from different suppliers caused unexpected foaming behavior.
Claim: Operator claimed breach of chemical supply and quality contract.
Decision: Tribunal apportioned liability among suppliers; partial compensation awarded.
Case 5: PT Balongan Refinery vs. EPC Contractor JKL (2019)
Issue: Foaming occurred during startup due to incorrect circulation rates and tray operation.
Claim: Operator alleged contractor failed to provide adequate operating procedures and training.
Decision: Tribunal held contractor partially responsible; damages awarded for remedial training and process stabilization.
Case 6: PT Refinery Indonesia vs. Amine Manufacturer MNO (2020)
Issue: Foaming incident during continuous operation traced to substandard amine concentration and chemical degradation.
Claim: Operator sought replacement chemicals and recovery of production losses.
Decision: Manufacturer found partially liable; tribunal ordered amine replacement and partial compensation for lost output.
4. Lessons from Case Law
Clear Chemical & Equipment Specifications: Define amine concentration, grade, absorber internals, and tray/venting design clearly in contracts.
Operational Accountability: EPC contractors and operators are responsible for startup, flow management, and staff training.
Comparative Fault: Tribunals often apportion liability among suppliers, contractors, and operators based on evidence.
Maintenance & Monitoring Records: Cleaning logs, chemical replacement records, and operational data are critical.
Warranty Enforcement: Suppliers are accountable for non-conforming chemicals or defective equipment under performance guarantees.
Arbitration as Preferred Forum: Technical complexity, safety, and operational losses make arbitration more suitable than court litigation.
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