Monday, August 31, 2015

Brunei Industrial Island Becomes a Reality

The Oxford Business Group reported the following news:

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Brunei Darussalam’s industrial island becomes a reality
Economic News Update
28 Aug 2015

Expectations are high for Brunei Darussalam’s downstream energy sector, as Pulau Muara Besar (PMB) island prepares to welcome the country’s first oil refinery and aromatics cracker complex, highlighting the Sultanate’s growing potential as a destination for value-added processing.

Upon completion, the plant is expected to inject an estimated $2bn per annum into the Bruneian economy and boost GDP by around 2% when fully operational, according to Mohammad Parvez Imdad, an economist at the South-east Asia department of the Asian Development Bank, speaking to local media earlier this year.

Island future

First envisaged in 2011, the PMB industrial island project mirrors Singapore’s Jurong Island, an artificial land mass located south-west of the city-state’s main island. Jurong has become a cornerstone of Singapore's energy and chemicals industry, and home to a portfolio of more than 100 leading global petroleum firms.

The petrochemicals plant is a key part of the 955-ha industrial zone, which is currently undergoing major infrastructure upgrades. This includes construction of a deepwater container terminal, an export processing zone, a bridge linking the island to the mainland and a manufacturing centre with commercial facilities and services.

With production capacity of 160,000 barrels per day (bpd) of petroleum products, the 260-ha plant will be built by China’s Hengyi Industries and is due to begin operations in 2018.

Upon completion of the first phase, which is expected to see $4bn worth of investment, the complex will boast annual production of 1.5m tonnes each of diesel, naphtha cracker and paraxylene; 1m tonnes of jet A fuel; 500,000 tonnes of benzene; 400,000 tonnes of gasoline; and 135,000 bpd of crude and condensates.

The second phase will see the addition of new units for olefin and mono-ethylene glycol production, as well as an additional 1m tonnes of paraxylene output per year.

Adding value

Development of the plant underscores growing recognition of the importance of value-added activities for future economic expansion in the Sultanate.

Crown Prince Al-Muhtadee Billah, the current senior minister at the Prime Minister’s Office (PMO), highlighted the potential for downstream activity to widen growth prospects. “These spin-off activities are important, as they would provide commercial opportunities for local businesses and create more jobs for locals,” he told OBG last year.

After a site visit in June, Bank Islam Brunei Darussalam’s managing director, Javed Ahmed Javed, echoed this sentiment. “This is a major project by regional standards. It will bring in the much-needed impetus in terms of employment and business spin-offs to the economy,” he told local press.

Senior officials have also called for an integrated marine supply base to be built on PMB, saying it would open further commercial and logistics opportunities in oil and gas-related industries.

Through ventures such as these, Brunei Darussalam plans to increase downstream economic output from $300m in 2012 to $5bn by 2035, according to a recent white paper issued by the Energy Department at the PMO.

Building bridges

While the PMB plant was forecast to begin operations in early 2017, the addition of a coking plant and construction of a single-buoy mooring system have resulted in a delay of at least a year. However, progress is being driven by the start of work on a 2.7-km, four-land bridge linking the western shore of PMB to Brunei’s mainland at Kampung Serasa.

The three-year bridge project includes the construction of a four-lane main road on PMB as well as associated utilities such as power, water and telecommunications services.

Following the ground-breaking ceremony in May, Abdurahman Abdul Aziz, assistant CEO of the Brunei Economic Development Board, told local media that once minimum infrastructure had been completed, contractors could start using the bridge to transfer workers, services and supplies, instead of ferrying them across through temporary jetties.

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