Brunei Darussalam Methanol Plant, Brunei

Brunei is a small country (Sultanate) situated adjacent to Malaysia in the South China Sea. The country is not known for its chemical industry but does rely heavily on oil and gas – these account for over half the country's GDP. In November 2005 the decision was made to construct a methanol production plant on an industrial site near Sungai Liang.

The country has always strived for resource independence and industrialisation to an extent and basic chemicals seem a good place to start. Natural gas is available for conversion into methanol, which is in fierce demand. Methanol can be used in a multitude of ways to produce value-added products such as formaldehyde for use in the polymer industries.

The new plant is being constructed by a joint venture company (Brunei Darussalam Methanol Project Consortium) consisting of Mitsubishi Gas Chemical (MGC) (25%), Brunei National Petroleum Company Sdn Bhd (Petroleum Brunei) (50%) and Itochu Corporation (25%). The plant will be situated on a 16ha site at the Sungai Liang Industrial Park in the Belait District and is scheduled to be in operation by the first quarter of 2010.

Awang Yahya, Brunei Energy Minister, said at the formation of the consortium: "The Brunei methanol plant will be one of the landmark projects...of this generation…It will be the first petrochemical plant in Brunei, and for the first time our gas will be used to manufacture other products."

CONSTRUCTION

Construction of the new plant is being undertaken by Mitsubishi Heavy Industries under an EPC basis (engineer, procure, supply). The cost of construction of the new facility has been estimated at $400m. The plant design will give an output of 2,500t of methanol per day (850,000t annually).

Feasibility studies have been carried out and planning permits have been obtained (Sungai Liang Authority signed over a lease for the site in April 2007) and construction is due to begin in 2008. The final investment decision will be taken in the fourth quarter of 2007. The plant will also produce a range of products from the methanol it produces, including resins, adhesives, polymers, paint and gasoline additives.

AGREEMENTS

Mitsubishi Gas Chemical (MGC) signed a Memorandum of Understanding (MoU) with the consortium in late 2005 so that it can buy the entire production of the plant when it is completed. This is to ensure that the sale and marketing of methanol from the plant is conducted in a fair way with the input of Petroleum Brunei.

MGC also agreed to provide technical services for the plant and to supply the catalyst. The plant will also need a good supply of natural gas (methane) to use as feedstock for methanol production. Petroleum Brunei has signed a MoU with the consortium amounting to a gas sales and supply agreement which means that they will supply around 0.5 trillion cubic feet of gas to the plant over a 22-year period. Brunei Shell Petroleum has also agreed to supply gas for the new plant.

The financing for the project has been partially secured by a further MoU signed between Petroleum Brunei and the Japan Bank for International Cooperation (JBIC) in October 2006.

Junichi Kondo, senior executive director of JBIC, said at the signing: "This project is part of our nation's pursuit for further industrial development and it will be the first gas-based petrochemical plant in Brunei… It is a key project that is conducive to the economic and industrial diversification of Brunei."

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