Chinese firm gets BEDB nod for refinery & aromatics cracker

04 Jul '11

3 min read

The Brunei Economic Development Board (BEDB) announced that His Majesty The Sultan and Yang Di-Pertuan of Brunei Darussalam has consented to the establishment of a US$2.5 billion oil refinery and aromatics cracker project.

The oil refinery and aromatics cracker project, which will be developed in two phases by Zhejiang Hengyi Group Co. Ltd. (Zhejiang Hengyi), a leading private Chinese company, will be located on a 260-hectare site at Pulau Muara Besar. With a production capacity of approximately 135 thousand barrels per day, the first phase of the refinery and aromatics cracker project will comprise the production of petroleum products such as gasoline, diesel and jet A-fuel, as well as paraxylene and benzene which are mainly used in textile production.

The establishment of the oil refinery and aromatics cracker project in Brunei is expected to create more than 800 jobs, of which the majority will be for local Bruneians. The company has also offered a local equity participation of up to 30 per cent in the project. Recently, a site visit to Zhejiang Hengyi's downstream plants and Sinopec Zhenhai Refinery in China was conducted by the BEDB, together with the Energy Division of the Prime Minister's Office, as a major part of the due diligence process.

Following successful completion of Phase 1, the company plans a further investment of US$3.5 billion for the expansion of the refinery to allow for the production of olefins, which are used as raw materials in plastic production. This expansion is expected to create a further 1200 employment opportunities.

A portion of the crude oil and condensate, which will be used as feedstock, will be sourced locally and a portion of the gasoline, diesel and jet A-fuel produced will be marketed domestically in order to meet the growing demand of local consumption.

The front-end engineering design for the project will be undertaken by Sinopec Engineering Incorporation, the engineering arm of Sinopec, which is one of the major state-owned petroleum companies in China. This will be followed by a detailed engineering study over the next twelve months before the construction of the plant commences.

In addition to creating a significant boost in local employment, the project is also expected to procure non-technical supplies from local companies as well as other indirect spin-offs and increased economic activity such as plant construction and maintenance, packaging, shipping, logistics and warehousing, as well as training and development opportunities in relevant fields.

“The BEDB will continue to work very closely with Zhejiang Hengyi and other relevant stakeholders towards the successful implementation of this project. It is hoped that the investment by Zhejiang Hengyi will not only contribute to Brunei's economic growth but will also act as a catalyst to develop Pulau Muara Besar and its surrounding areas.” said Dato Paduka Hj Ali Apong, Deputy Ministerat the Prime Minister's Office, who is also Chairman of the BEDB.

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