FLAGSHIP OF BRUNEI-CHINA COOPERATION A refinery and petrochemical plant begins commercial operation in Brunei

By

On November 3,the Hengyi Crude Oil Refinery and Aromatics Cracker Complex,a refinery and petrochemical plant located on Pulau Muara Besa (PMB),an island northeast of Bandar Seri Begawan,the capital of Brunei,began full operation after a series of complex amalgamation and commissioning tests.That afternoon,the first tanker was loaded with liquefied gas and departed for overseas destinations.

At present,the production and operation of the PMB plant is stable,with all products qualified.It has officially entered the stage of commercial operation with its load expected to increase to full capacity relatively soon.Marketing plans for the plant’s refined oil have been finalized,and the channel for the sale of refined oil has opened.

The plant is a joint venture of China’s Hengyi Petrochemical Company and the government of Brunei,with Hengyi Industries Sdn Bhd as the market entity.The first phase of the project covers an area of 375 hectares,with total investment of US$3.45 billion.It is not only a flagship project on the Belt and Road jointly built by China and Brunei but also Brunei’s largest project involving foreign investment.

Success on a Lonely Island

It is hard to imagine how a primitive lonely island covered with tropical jungles and large swamps became a world-class refinery and petrochemical facility in eight short years.

In June 2011,the PMB project was officially approved by the government of Brunei.Chen Lianchai,CEO of Hengyi Industries Sdn Bhd,retains vivid memories of the early difficulties.“PMB was connected to the mainland of Brunei in May 2018 by a cross-sea bridge built by China Communications Construction Company,”he illustrates.“Previously,it was a primitive lonely island with neither transport,fresh water,nor electricity.”

A bird’s eye view of the PMB refinery and petrochemical project.

“We had to remove the tropical jungles and the swamp silt first,”adds Chen.“It was a lot of hard work.”PMB is the habitat of many rare animals and plants.Before construction commenced,Hengyi devised a comprehensive relocation plan alongside Brunei’s environmental protection agencies,professional consulting firms and Universiti Brunei Darussalam.Hengyi also set up six environmental monitoring stations around the island for daily updates.

It took seven years to complete the entire project.The first drilling began in 2017,two and a half years before mid-term delivery.It took only two and a half months to complete the complex amalgamation and commissioning run test.The whole chemical process was a success,achieving the goal of“zero fire disaster,zero pollution and zero injury.”Qiu Jianlin,chairman of Hengyi Petrochemical Company,considers it rare in the history of the petrochemical industry of China and the world for such a task to be completed with high standards in such a short period of time.

Benefits for Both Parties

The PMB refinery and petrochemical plant has benefited both parties.For Hengyi,it is an important component of its integrated industry chain,which will add to its ability to earn profits without much risk.

For the governments of both China and Brunei,the PMB plant is an important project on the Belt and Road,which contributes to Brunei’s diversified development strategy and is conducive to realization of Brunei’s Wawasan 2035.In a joint statement between the People’s Republic of China and Brunei Darussalam issued on November 19,2018,the two sides agreed“to promote cooperation on the Hengyi Industries Sdn Bhd refinery and petrochemical plant on Pulau Muara Besar,Brunei Darussalam,in a safe and timely manner.”

In February 2019,H.R.H.Crown Prince Haji Al-Muhtadee Billah of Brunei visited the PMB plant.The prince spoke highly of the environmental performance and advanced technology of the project.He suggested the project continue to meet international standards,create jobs and foster more business opportunities for the local economy.

In September,H.R.H.Princess Hajah Masna,Ambassadorat-Large at the Ministry of Foreign Affairs of Brunei,visited Hengyi’s headquarters in Hangzhou,capital of Zhejiang Province,during her visit to China.She applauded Hengyi’s achievements in Brunei including personnel training and fulfillment of environmental and social responsibilities.

The first phase of the PMB project is already equipped to handle a capacity of 8 million tons of crude oil per year,enough to process both local and imported oil.The main products par xylene and benzene from the first phase will be exported to China,while products such as gasoline,diesel and kerosene will feed Brunei’s domestic market.The first year of production is expected to add US$1.33 billion to Brunei’s gross domestic product.

The oil and gas industry has been the pillar of Brunei’s national economy.Around 20,000 people are employed in the sector.Oil and gas account for 97 percent of its exports and their revenues account for 57 percent of its GDP.However,Brunei is weak in the petrochemical industry and lacks qualified personnel.Therefore,localization of the project to ensure more job opportunities has been a requirement of the Bruneian government.The PMB plant now employs more than 1,600 people including 400 locals.According to plans,1,665 jobs will be created for the local population by the time formal operation of the first phase of the project begins.The second phase of the project is expected to be completed within three years and expand capacity to process 14 million tons of crude oil per year and create 2,390 more jobs for local people.

As the Hengyi project develops,Brunei’s oil and gas industry will expand upstream and downstream along the industry chain.According to 2019 statistics released by Brunei’s Ministry of Energy,Manpower and Industry,new developments in the oil and gas industry are expected to create 45,000 new jobs by 2024 and lower the country’s unemployment rate from 9.3 percent to 3 percent.

Oil and gas account for 97 percent of its exports and their revenues account for 57 percent of its GDP.

New developments in the oil and gas industry are expected to create 45,000 new jobs by 2024 and lower the country’s unemployment rate from 9.3 percent to 3 percent.

Cultivating Local Professionals

To train local professionals,Hengyi has offered scholarships for qualified Bruneian students to study chemical engineering at Zhejiang University.After they finish their studies,Hengyi offers them apprenticeships at its plants in China.So far,a total of 80 students in five groups have been trained through this program.“The first group of students has already started working for Hengyi,”reveals Chen.

Bruneian Liyana was part of the first training program at Zhejiang University in 2014,where she studied chemical engineering and the Chinese language.After graduation,she served a five-month apprenticeship at Hengyi’s refinery and petrochemical plants in Zhoushan and Xiaoshan.She has now worked for Hengyi Industries Sdn Bhd for nearly two years.“I like this job very much,”declares Liyana.“As a technician,I get respect for my contributions to the country.”

To train machine operators,Hengyi is collaborating with Lanzhou Petrochemical College of Vocational Technology to organize training programs.The first class of 30 Bruneian students are currently in training.Hengyi plans to train 75 more operators each year.Hengyi also collaborated with PetroChina’s training base in Puyang,Henan Province,to train 65 Bruneian firefighters.The graduate firefighters returned to Brunei and now work for Hengyi.

“Economic cooperation can strengthen the foundation for bilateral relations,”comments Chen.“We would like to serve as an important link for China-Brunei friendship.”