Hengyi aims to launch Brunei refinery in 2019

08 June 2017, Week 22 Issue 646

China’s Zhejiang Hengyi Group aims to finish building a US$3.4 billion refinery in Brunei in October 2018, with start-up slated for 2019.

The East China-based synthetic fibre maker had originally targeted a 2015 start-up for the 160,000 bpd facility, which it says has been plagued by local infrastructure delays.

The plant will be located in Pulau Muara Besar and will mostly supply feedstock for Hengyi to produce pure terephthalic acid (PTA), an intermediate for making polyester, but it will also produce fuel. It will be the biggest facility of its type outside China to be developed by a private Chinese company and has also generated contracts for a number of other Chinese firms.

China’s Lanzhou LS Heavy Equipment has won an order to build key production units at the plant, including a 1.5 million tpy aromatics facility and a 2.2 million tpy hydrocracking unit.

CNPC unit Kunlun Construction and Engineering also won a deal in late 2016 to build a 15 million barrel tank farm at the facility.

The delays Hengyi has faced in finishing the plant – which the company blames mostly on local infrastructure – have turned out to have unexpected benefits.

With a number of new refineries set to soon come online in Southeast Asia creating oversupply in the region, “any delay is good,” Energy Aspects’ Nevyn Nah told Reuters. Vietnam’s US$7.5 billion, 200,000 bpd Nghi Son refinery is scheduled to start operating in 2018, while Malaysia’s Petronas is set to start up the Refinery and Petrochemical Integrated Development (RAPID) project in 2019, he noted.

Unnamed industry sources told Reuters last week that Hengyi might explore a swap deal with Royal Dutch Shell, supplying refined products to the latter in return for crude. Although Shell agreed in 2012 a 15-year deal to supply the Brunei refinery with crude oil, it is not clear whether that deal remains valid.

Already a major exporter of LNG, Brunei plans to expand its crude and gas output this year to 430,000 boepd.

Edited by

Andrew Kemp

Editor

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