BANDAR SERI BEGAWAN – The Brunei government and Hengyi Industries are “very close” to an agreement to begin a multi-billion dollar expansion of the Hengyi petrochemical complex on Pulau Muara Besar.

Second Minister of Finance and Economy YB Dato Seri Setia Dr Hj Mohd Amin Liew Abdullah said the second phase of the project will be significantly larger than the first phase, which saw Hengyi invest US$3.45 billion investment for the construction of an oil refinery and aromatics plant.

“We have a lot of issues to discuss before we can go ahead with it but we are very close to it. Once we reach an agreement then we can move forward,” the minister said during a COVID-19 press conference last Thursday.

According to a news report from Reuters, Hengyi said it plans to spend US$13.65 billion in Phase 2 of development, but YB Dato Dr Hj Md Amin did not confirm the dollar value of the investment.

“When we have something to announce, we will share it with the public in due course,” he said.

Hengyi began operations on Pulau Muara Besar in November 2019 and has since exported over $1.4 billion in petroleum products, giving a significant boost to Brunei’s economy.┬áThe sultanate recorded positive GDP growth of 3.9 percent in 2019, the first time in four years.

The downstream sub-sector is expected to continue driving Brunei’s economic growth in the second half of the year, and has managed to soften the economic impact of COVID-19.

According to Hengyi’s most recent stock filing, Phase 2 will increase capacity of the oil refinery from 160,000 barrels per day to 280,000-bpd. The Chinese firm will also build a paraxylene unit, an ethylene plant and purified terephthalic acid (PTA) facility.

Paraxylene and PTA are key materials for making polyester fibre used in textiles and packaging.

Construction will take three years and the investment is expected to bring an additional annual net profit of about US$1.72 billion, Hengyi said, without giving a date for starting work.