HISTORY

Prior to the oil boom, Balikpapan was an isolated Bugis fishing village. The etymology of Balikpapan name (lit. balik is behind and papan is a plank) came from a folk story where a local king threw his newborn daughter into the sea to protect her against his enemies. The baby was tied beneath some planks, which were discovered by a fisherman.[citation needed]

In 1897, the first drilling of oil began by a small refinery company.[1] Roads, wharves, wharehouses, offices, barracks and bungalows construction started when a Dutch oil company arrived in the area. On January 24, 1942, Balikpapan became a war theatre between Japanese army and the Allied Forces in which the oil refinery and other facilities were heavily damaged. Several campaigns followed until the 1945 Battle of Balikpapan which concluded the Allied Forces' Borneo campaign after which they took control of the Borneo island.

Extensive wartime damaged almost total oil production in the area and a major repairs were performed by the Royal Dutch Shell company. Shell continued operating in the area until Indonesian state-owned Pertamina took it over in 1965.[1] Having lack of technology, skilled manpower and capital to explore the petroleum region, Pertamina sublet petroleum concession contracts to multinational companies in the 1970s.

Being the only oil refinery site in the region, Balikpapan emerged as a revitalized center of petroleum production. Pertamina opened its regional headquarter in the city, followed by branch offices establishment by international oil companies. Hundreds of labourers from other part of Indonesia and skilled expatriats as managers and engineers, flocked into the city.