Blog
18th September 2020
Hengyi Industries Sdn Bhd is a joint venture between private Chinese enterprise (Hengyi industries) and Damai holdings (wholly-owned subsidiary under the Brunei government's Strategic Development Capital Fund) with the former holding 70% of the shares and the latter holding 30%. It is the largest overseas investment by a private Chinese enterprise and the largest foreign direct investment in Brunei Darussalam. This joint venture is the perfect synergy - with the government of Brunei Darussalam aiming for the development of the downstream segment of its energy sector and Zhejiang Hengyi Group aspiring to back integrate and build a complete industry chain. Hengyi, a global market supplier for refined products such as LPG, Propylene, Isobutane, Diesel, Gasoline and other petrochemical products such as Benzene, Paraxylene, and Sulphur, was successful with its phase 1 plant start-up and operations, looking forward to investing around USD 13.654 billion for the phase 2 construction and set-up.
Chen Liancai, Hengyi's chief executive officer, said that the establishment of the proposed second phase of the 955-hectare industrial park, Pulau Muara Besar (PMB) oil refinery and the petrochemical project would take 3 years to get completed. Upon completion, it would add another 14 million tons of crude oil processing capacity per year to the existing 8 million tons capacity from phase 1. It is to be noted that USD 3.45 billion was spent on phase 1 construction and it took about 2.5 years to complete construction and another 2.5 months for commissioning activities before operations began in November 2019, successfully.
"After the completion of the second phase, our products will not only meet the domestic market demand in Brunei but also supply the regional and international markets", Chen said. He also reminded that the second phase of construction was yet to be approved by the Brunei government. Brunei, being a part of the ASEAN (Association of Southeast Asian Nations) that includes Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos, Cambodia, and Myanmar, was known to consume about 0.55 MToe (Million Tonne of oil equivalent) of oil and gas, whereas, ASEAN’s expected demand for oil and gas is given below.
Oil and Gas Demand, in MToe, ASEAN Countries, 2018-2040
Source: IEA
Crude oil refining ensures self-sufficiency in terms of low-cost local consumption of petroleum products, the surplus quantities being exported to other nations, while the downstream chemical products that are raw materials to other industries are straight away sent to China. The nations meeting their demands from the project are the US, India, Japan, and many ASEAN countries. With the construction of the new phase, the existing 1.5 million tonnes of production of Paraxylene (from phase 1), annually, is to be doubled along with the production of ethylene. The existing production of Benzene amounts to about 5,00,000 tonnes, also a result of phase 1 construction. Paraxylene is an important ingredient for making purified Terephthalic acid (PTA) which in turn is the major constituent of PET. Thus, Hengyi looks to dominate in the polyester manufacturing market as well.
Wang Xiaolin, President of the Chinese Enterprise Association in Brunei and General Manager of Bank of China Brunei Branch, said "The second phase of Hengyi's PMB project is expected to create more jobs in Brunei, boost local industries and growth and help achieve the diversification of Brunei's economy". Not only will this project add value to Brunei, by reducing the fuel price locally or serving as Brunei’s economy boost through exports, but also increase the local job opportunities. Chairman of Zhejiang Hengyi Group Co. Qiu Jianlin, after signing a Memorandum of Understanding with the Government of Brunei Darussalam, before the start of phase 1 constructions had said that phase 1 and 2 would together create 2471 jobs of which 70% preference would be given for Bruneian. “The PMB project will also demand the provision of services, financing and logistics from local Bruneian companies, which we estimate will create another 3,000 to 4,000 jobs” Jialin had said.
Hengyi is committed to fulfilling its ambition of being the leading petrochemical plant in the region through innovation, business sustainability, environment, and personal safety. With economic and social growth it plans on setting a solid foundation for the achievement of Wawasan Brunei 2035.