Taiwan says Kanematsu involved in Brunei refinery

Taiwan says Kanematsu involved in Brunei refinery

TAIPEI (Reuter): Taiwan monopoly Chinese Petroleum Corp said yesterday it would form a joint venture with Japan's Kanematsu Corp and the Brunei government to build Brunei's second oil refinery.

"Kanematsu is also in the project," a Chinese Petroleum official told Reuters by telephone.

Industry sources in Taipei said Kanematsu would build the proposed US$1 billion refinery complex, which officials say will have daily production capacity of 60,000 barrels.

Chinese Petroleum Corp, a state-run company, would sign a memorandum of understanding with Brunei's state petroleum bureau on July 23 to build the refinery plant, company officials said. Signing for Chinese Petroleum would be its chairman, Lee Shu- chiu, the company said.

"The chairman (Lee) will visit our Singapore office on July 17 and go to Brunei to sign the refinery memorandum on July 23," a senior Chinese Petroleum official told Reuters by telephone.

Once the memorandum is signed, Chinese Petroleum and Kanematsu will have 18 months to complete a feasibility study, after which a letter of intent would be signed and the start of construction could be authorized, the official said.

There were no estimates as to when the refinery might be completed and enter production.

Chinese Petroleum officials have estimated the joint-venture project was worth US$1 billion, but declined to give details.

Chinese Petroleum officials said the integrated chemical complex, once completed, would use Bruneian light sweet crude to produce 420,000 tons of p-xylene a year and 200,000 tons of benzene a year.

The refinery's output would be earmarked mainly for export. Oil-rich Brunei, a southeast Asian sultanate of 270,000 people that shares the island of Borneo with Malaysia and Indonesia, has only one small refinery with a daily capacity of just 9,000 barrels.

That plant is operated by Brunei Shell Petroleum Co Bhd, an equally owned joint venture between Royal/Dutch Shell and the Brunei government.

In May, Brunei's Oil and Gas Agency signed a letter of intent with German state-owned engineering firm IAB to build a 160,000 barrel-per-day refinery at cost of 2.6 billion marks (US$1.5 billion).

IAB has said a feasibility study for the project would be completed by the end of 1997 and construction would take four and a half years.

Chinese Petroleum said its project with Kanematsu was not related to the German project.

In 1996, Brunei produced about 165,000 barrels a day of crude and has proven reserves of 1.4 billion barrels.