A 160,000-bpd crude oil refinery that Chinese Hengyi is building in Brunei should start operating in 2019, source close to the project told Reuters. The refinery, worth US$3.4 billion, will supply feedstock to Hengyi - a major Chinese synthetic fiber manufacturer.
Besides feedstock for the Chinese company's operations, however, the Brunei refinery will also produce fuels, which will turn it into a rival to Singapore - currently the biggest regional fuel producer.
Competition in fuels in Southeast Asia is about to intensify further as new refineries come online in Vietnam and Malaysia as well, Reuters notes. The Malaysia refinery, dubbed RAPID, on which state oil company Petronas is partnering with Saudi Aramco, is valued at US$7 billion. Aramco will supply 70 percent of the crude that the refinery will process, beginning in 2019, like the Brunei facility.
In Vietnam, the Nghi Son refinery, valued at US$7.5 billion with a capacity of 200,000 bpd, is scheduled to start operating next year, a delay from the initial launch date that was set for the third quarter of this year.
Hengyi's Brunei project also ran into delays, which the Chinese company attributed to, among other things, problems with the local infrastructure. However, construction should be completed in 2018. The refinery will be the largest oil processing facility managed by a Chinese company abroad.
Brunei produced around 127,000 bpd of crude oil and 243,000 bpd of oil equivalent in gas as of October 2016. Plans are to boost this to a total 430,000 bpd this year. The tiny country is also a major exporter of LNG.
Brunei was no exception to the widespread economic depression among oil-dependent economies following the 2014 oil price crash, with the budget deficit for fiscal 2015/2016 hitting 15.4 percent of GDP. This should narrow to 13.1 percent in the current fiscal year.
By Irina Slav for Oilprice.com
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