Brunei Moves on World Scale Ammonia/Urea and Methanol Plants in $5.2 Billion Industrial Park Project

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). World scale ammonia-urea and methanol plants plant will be the first two projects constructed at the Sungai Liang petrochemical complex to be developed in Brunei. The Brunei Economic Development Board (BEDB) said that total investment in the industrial park complex would eventually reach $5.2 billion, and that the first two projects would see $900 million of foreign direct investment (FDI). The complex project is a step in the strategic plan to diversify Brunei's oil and gas resource-dependant economy.

The ammonia-urea plant will have an annual production capacity of 700,000 tons of ammonia and 1.2 million tons of urea, and will create 200 fulltime jobs, with another 300 jobs in the downstream spin-offs. When it is commissioned in 2008, Brunei claims it will be the only world-scale urea manufacturing plant in Asia. Incitec Pivot will have majority offtake rights for the plant's output and will operate and maintain the manufacturing complex for a consortium. Consortium members in the $600 million project are Incited Pivot (ASX:IPL) (Melbourne, Australia), Mitsubishi (Tokyo: 1871), and Westside Limited.

Launching the projects this week, the chairman of the BEDB, Pheni Retired Major General Dato Haji Awang Mohammad, said that small and medium entrepreneurs (SMEs) should not be disheartened, as the BEDB will bring this sector into their strategy, to enable all sectors of business to benefit as the result of diversification. He said that these first projects will act as catalyst for future investments in Brunei. He added that organizations, and especially education institutions, must be aware and adapt to the strategy.

Greg Witcombe, Managing Director and CEO of Incitec Pivot, said that Brunei's strategic location, committed government, and competitive gas prices were determining factors in selecting the country for the ammonia/urea project. He said the outlook is positive, with global demand for urea, the fertilizer of choice throughout the world, growing at 3% per annum. In addition to fertilizer exports product will be targeted at manufacturers of adhesive, particle board for construction, and melamine to make molded plastics.

Witcombe said that the Brunei project would complement ammonia and urea production at the company's Brisbane plant, for which a long-term gas supply agreement to 2017 has been secured. IPL currently produces 250,000 tons of Australia's annual demand for urea of around 1.5 million tons. The balance is imported mainly from the Middle East.

The companies cooperating on the methanol project, Mitsubishi Gas (TOKYO: 4182) and Itochu Corporation (TOKYO: 8001), are planning a 200,500 ton-per-year plant that will also use local gas feed, with an investment of $228 million.

A 'master planner' body will be appointed for Sungai Liang by the end of 2004 to ensure that projects are developed effectively, including the scope of infrastructures and utilities required for a world-class site. It will also check track records of bidding companies and ensure that the park is fully integrated into the local community, as well as conduct environmental impact assessments to ensure that the park complies with local and international standards.

Both of the current project groups have stressed that the plants will be in accordance with Brunei's health, safety, and environmental policies and international standards.