BRUNEI-MUARA – The first phase of Hengyi’s crude oil refinery and petrochemical plant is on track for July completion and will begin operations by the end of 2019, the minister of Energy, Manpower and Industry said on Thursday.
Dato Seri Setia Dr. Hj Mat Suny Hj Mohd Hussein made the remarks during a site visit to the Pulau Muara Besar Industrial Park (PMB), where HRH Prince Haji Al-Muhtadee Billah, the Crown Prince and Senior Minister at the Prime Minister’s Office, conducted a working visit yesterday.
The refinery — a joint venture between China’s Hengyi Industries and the Brunei government — is expected to contribute $1.3 billion to GDP in 2020, in a much-needed boost to Brunei’s stagnant economy.
The operation will have the capacity to refine 175,000 barrels of crude oil a day for export to China and other regional markets, eventually increasing to 22 million tonnes per year when construction of phase two is complete in 2022.
The minister said that 12,000 barrels of oil per day will be reserved for domestic use, guaranteeing an adequate supply of domestic petroleum products.
Catalyst for growth
The first phase of the 276 hectare project has a total investment of USD$3.4 billion, with Hengyi committing a further US$12 billion for development of the second phase, making it the largest foreign direct investment project in the sultanate.
Hengyi owns 70 percent of shares in the project, while Damai Holdings — a subsidiary under the Ministry of Finance and Economy’s Strategic Development Capital Fund — owns the remaining 30 percent.
Hengyi claims that after completion of its first phase, the oil refinery will be able to contribute as much as 40 percent to Brunei’s GDP.
In a previous interview last November, the second minister of Finance and Economy, YB Dato Seri Setia Dr Hj Mohd Amin Liew Abdullah, said that crude oil will be transported from Belait, but also imported from overseas for refining at Pulau Muara Besar.
“As well as exporting the refined product to China, we will also service neighbouring cities such as Miri and Kota Kinabalu, providing a security of supply that is much easier to get from Brunei than Singapore or elsewhere,” he told media on the sidelines of the first BIMP EAGA-China ministerial meeting.
The second phase will focus on manufacturing downstream products such as aromatics and industrial chemicals that are used to make clothing and plastics, and could generate revenue up to US$10 billion per annum, according to Hengyi’s website.
That would amount to more than 80 percent of Brunei’s GDP in 2017, which was recorded at $16.5 billion.
“Further downstream industries are the next phase of development,” said Dato Dr Hj Mohd Amin.
“Today we are only seeing a big plant bring produced in PMB but once that is completed and running there will be new opportunities, development of new plants around Hengyi refinery that create further economic activities for Brunei that can create jobs and spinoff activities.”
Boost to local employment
There are currently 276 local workers directly employed under Hengyi Industries, with 50 percent of future jobs — or 1,665 placements — earmarked for Bruneians once operations begin, according to the Ministry of Energy, Manpower and Industry.
The aim is to increase workforce localisation to 90 percent in subsequent years.
With stagnation in the job market, and national unemployment at 9.3 percent — the highest rate in ASEAN — the government is banking on the Hengyi project to provide a boost to local employment.
Further economic spin-offs are expected to be generated for local businesses — such as security, catering — which can provide 2,400 indirect employment opportunities, the ministry claims.
“During the construction phase alone, a total of 82 local companies were awarded contracts by Hengyi Industries, which included the supply of articles for construction, construction survey services, bicycle supplies, bus procurement, car rental, ambulance services, chemical product supplies, cleaning services, boat services and several others,” the ministry said in a statement issued at the end of the crown prince’s visit to PMB.