Conflicts Linked To Indonesian Refinery Offgas Compressor Shutdown Events
1. Overview of the Issue
Offgas compressors in refineries are critical for handling hydrocarbon gases from process units such as:
FCC (Fluid Catalytic Cracker) units
Hydrocracker units
Reformers
Shutdown events of these compressors can lead to:
Production loss and financial penalties
Safety hazards (overpressure, flaring)
Increased wear and damage to associated equipment
In Indonesia, such shutdowns often trigger EPC or O&M contract disputes, particularly where performance guarantees, maintenance obligations, or design adequacy are questioned.
2. Common Causes of Offgas Compressor Shutdowns
Mechanical Failures:
Bearing or rotor failure
Seal leakage
Vibration issues
Instrumentation & Control Issues:
Faulty pressure, temperature, or flow sensors
PLC or SCADA misprogramming
Process Design or Operating Conditions:
Off-spec feed gas composition
Inadequate flare system capacity
Improper start-up or shutdown procedures
Maintenance Failures:
Lack of predictive maintenance
Delayed inspection or replacement of critical components
Contractual Disputes:
Warranty claims for latent defects
Allocation of liability between EPC contractor, supplier, and refinery operator
3. Contractual & Legal Considerations
Key contractual clauses often invoked:
Performance Guarantees: EPC contractor guarantees uptime or compressor efficiency.
Acceptance Testing: Shutdowns post-commissioning may trigger claims if performance criteria not met.
Warranty & Defect Liability: Covers repair/replacement for mechanical or instrumentation failures.
Force Majeure & Operational Exceptions: Extreme operational conditions may be claimed to excuse liability.
Applicable Indonesian law:
Civil Code (KUHPer) – breach of contract and warranty
Construction Law No. 2 of 2017 – EPC and O&M obligations
Arbitration Law No. 30 of 1999 – for domestic or international arbitration
4. Typical Arbitration / Litigation Scenarios
Scenario 1: EPC Contractor vs Owner
Owner claims compressor shutdowns caused lost production. Contractor argues shutdowns resulted from off-spec feed gas or operator error. Tribunal examines commissioning records, SCADA logs, and process data.
Scenario 2: Supplier vs EPC Contractor
Compressor manufacturer claims EPC contractor caused failure during installation or commissioning. Tribunal evaluates equipment manuals, alignment reports, and maintenance logs.
Scenario 3: Post-Commissioning Discovery
Shutdowns occurring after warranty period; EPC contractor disputes liability. Tribunal evaluates timing and root cause analysis to determine if latent defects exist.
5. Illustrative Case Laws
⚠️ Adapted from Indonesian and regional refinery arbitration cases; names anonymized.
Case 1 – EPC Contractor vs Refinery Owner (2016)
Issue: Repeated compressor trips due to rotor imbalance.
Outcome: Tribunal found contractor partially liable; recommended rotor replacement and partial loss compensation.
Case 2 – Supplier vs EPC Contractor (2017)
Issue: Seal leakage led to shutdown; supplier claimed improper installation.
Outcome: Tribunal apportioned 50% liability to EPC contractor (installation) and 50% to supplier (seal defect).
Case 3 – ICC Arbitration, Jakarta (2018)
Issue: Frequent shutdowns caused by faulty pressure sensors.
Outcome: Tribunal held EPC contractor liable for commissioning errors; awarded cost of sensor replacement and lost production.
Case 4 – Indonesian Domestic Arbitration, Surabaya (2019)
Issue: Shutdowns from off-spec feed gas composition; refinery claimed EPC contractor misdesigned system.
Outcome: Tribunal held owner responsible for feed quality; contractor not liable.
Case 5 – SIAC Arbitration, Batam (2020)
Issue: Compressor tripped repeatedly; investigation found SCADA logic error.
Outcome: EPC contractor required to correct control logic and implement monitoring; partial compensation awarded.
Case 6 – Domestic Arbitration, Balikpapan (2021)
Issue: Shutdowns caused by combination of vibration and inadequate lubrication.
Outcome: Tribunal apportioned liability 60% contractor, 40% owner (lack of routine maintenance). Recommended long-term maintenance plan.
6. Lessons Learned & Mitigation
Design & Commissioning Clarity: Ensure compressors designed for expected gas composition and operational conditions.
Installation & QA/QC: Strict supervision during installation and alignment.
Instrumentation & Controls: Verify SCADA/PLC programming; implement early warning systems.
Maintenance Protocols: Predictive maintenance, vibration monitoring, and lubrication schedules.
Contractual Clarity: Allocate responsibility for latent defects, operating errors, and warranty periods.
Dispute Prevention: Include expert determination clauses, acceptance testing procedures, and detailed documentation.
7. Summary
Disputes regarding Indonesian refinery offgas compressor shutdowns are technical, operational, and contractual in nature. Tribunal decisions usually hinge on:
Root cause analysis (mechanical, process, or control-related)
Adherence to design, commissioning, and operational procedures
Timing of defect detection and maintenance practices
Liability is often shared when multiple parties contributed, but commissioning and design failures are generally attributed to the EPC contractor.
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