Project sets eyes on markets in Vietnam, Malaysia, Indonesia, Philippines, China

PETROBRU has completed its initial feasibility study for the development of Brunei's second oil refinery, which eyes Malaysia, Indonesia, the Philippines, China and Vietnam as its markets.

Privately-owned PetroBru is set to embark on a more detailed study that will take between a year and 15 months to validate the initial findings.

"The objective of the (first) three-month study was basically to determine that from an economic viewpoint there is a viability for an export-oriented refinery and also if it is technically possible to build such a refinery here," Mohd Zaman Noordin, chief executive of PetroBru, said in an exclusive interview with The Brunei Times yesterday.

Findings of the study, done by consulting firm Wood Mackenzie, were presented on March 31 to the government through the Brunei Economic Development Board.

"The next phase ... will explore the initial findings that we have and then we will test that against our current scenarios, such as the high oil prices. We would seek to validate the (initial) findings," he said.

Mohd Zaman, however, emphasised that PetroBru does not have outright government approvals for the development of the refinery, which is estimated to cost US$3 billion to build, although the studies are done with government consent.

Among salient findings "is that there is an opportunity for an export refinery in Brunei and the target markets we are looking at are Malaysia, Indonesia, the Philippines, China and Vietnam", he said.

Asia Pacific now accounts for nearly 30 per cent of global oil demand and has outstripped North America as the world's largest demand centre.

The demand is expected to grow by more than 50 per cent of incremental demand by 2025. Oil product demand in Asia Pacific is at 1,149 million tonnes in 2006. This will grow to 1,879 million tonne by 2025, an increase of more than 60 per cent. More than 60 per cent of the region's demand growth is forecast to occur in China.

The products to be developed will include diesel, jet kerosene and petroleum.

"We are confident we could realise this project because we have investors waiting to come on board," Mohd Zaman said.

The proposed plant at the Pulau Muara Besar transshipment hub will have the capacity to refine 200,000 barrels of crude oil per day.

"The assumptions made in the study was that 50 per cent of the crude oil would ideally be from Brunei and the other half from the Middle East," he said, noting though that this is an assumption that does not indicate the project already has approval to source crude locally. "We (also had) various scenarios whereby we would be getting the crude solely from the Middle East.

"Obviously that would affect ... the profitability of the refinery but it is still doable."

There are 174 refineries in the Asia Pacific region with a total capacity of 24.1 million barrels per day. Ten new refineries are expected to add about 2 million barrels per day additional capacity.

Brunei's first refinery, the Seria Oil Refinery, is run by Brunei Shell Petroleum.

The Brunei Times