oil refinery, 1910s Before the oil boom of the early 1900s, Balikpapan was an isolated
Bugis fishing village. Balikpapan's
toponym (
balik = "behind" and
papan = "plank") is from a folk story in which a local king threw his newborn daughter into the sea to protect her from his enemies. The baby was tied beneath some planks that were discovered by a fisherman. An alternative story is that, at the time of the Kutai sultanate, Sultan Muhammad Idris sent 1000 planks to aid the Paser Kingdom to build a new palace. The planks were shipped from Kutai to Paser along the Borneo shoreline by roping all the planks together. 10 out of the 1000 planks that were originally shipped resurfaced in a place currently called Balikpapan.
Oil development On 10 February 1897, a small refinery company, Mathilda, began the first oil drilling. Building of roads, wharves, warehouses, offices, barracks, and bungalows started when the Dutch oil company Bataafsche Petroleum Maatschappij (BPM) arrived in the area.
Second World War On 24 January 1942, a Japanese invasion
convoy arrived at Balikpapan and was
attacked by four
United States Navy destroyers that sank three Japanese transports. The
Japanese army landed and met with no opposition by the Dutch troops, which had been ordered to evacuate after destroying the oil installations. In response to this, the Japanese
massacred 78 Dutch POWs and civilians.
Royal Australian Air Force (RAAF) intelligence determined that half of all lubricating oils used by the Japanese military and 60 percent of all their aviation fuel came from refineries in Balikpapan, and it was therefore an extremely important target. The American 380th Bombardment Group under the command of the RAAF, including the famous
B-24 Liberator Shady Lady, attacked the oil refineries in August 1943 from
Darwin, Australia. Amazingly, there were no aircraft losses, despite the crash landing and subsequent repair of the
Shady Lady. In September and October 1944, the
5th and
13th Air Forces under the command of General
George Kenney launched a series of five raids from
Morotai and
Noemfoor Islands. Kenney was a strong advocate for using the powerful
B-29 Superfortress for this raid but was forced to use the
B-24 Liberator instead. Unbeknownst to the Allied forces, the Japanese Air Force had conserved many of its dwindling numbers of fighters to protect the important oil refineries. The first two raids did not have fighter cover and suffered severe losses. The
1945 Battle of Balikpapan concluded the
Borneo campaign and Allied forces took control of Borneo island. Extensive wartime damage curtailed almost all oil production in the area until
Royal Dutch Shell completed major repairs in 1950.
CIA air raid In 1958, the
CIA attacked Balikpapan and stopped oil exports. The US was running a CIA
covert mission to undermine President
Sukarno's government by supporting right-wing rebels in Indonesia. The CIA, Taiwan and the Philippines had provided the
Permesta rebels in
North Sulawesi with an insurgent air force, the
Angkatan Udara Revolusioner (AUREV). On 28 April 1958, a CIA pilot,
William H. Beale, flying a
B-26 Invader bomber aircraft that was painted black and showing no markings, dropped of four bombs on Balikpapan. The first damaged the runway at
Sultan Aji Muhammad Sulaiman Airport, the second set the British oil tanker on fire and sank her and the third bounced off the British tanker without exploding. Beale's fourth bomb set on fire and sank the
Indonesian Navy KRI Hang Tuah, killing 18 crew and wounding 28. Before attacking
Hang Tuah, Beale also machine-gunned the oil pipes to Shell's wharf. The CIA had orders to attack unarmed foreign merchant ships in order to drive foreign trade away from Indonesia and weaken its economy, with the intention of undermining Sukarno's government. The day before attacking Balikpapan, Beale had also damaged a Shell complex at
Ambon, Maluku. His Balikpapan raid succeeded in persuading Shell to suspend tanker services from Balikpapan and withdraw shore-based wives and families to
Singapore. However, on 18 May Indonesian naval and air forces off
Ambon Island shot down an AUREV B-26 and captured its CIA pilot,
Allen Pope. The US immediately withdrew support for Permesta, whose rebellion rapidly diminished thereafter.
Subsequent history Shell continued operating in the area until Indonesian state-owned
Pertamina took it over in 1965. Lacking technology, skilled manpower, and capital to explore the petroleum region, Pertamina sublet petroleum concession contracts to multinational companies in the 1970s. With the only oil refinery site in the region, Balikpapan emerged as a revitalized center of petroleum production. Pertamina opened its East Borneo headquarters in the city, followed by branch offices established by other international oil companies. Hundreds of laborers from Indonesia, along with skilled expatriates who served as managers and engineers, flocked into the city. ==Geography==