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Brunei Methanol Company Inks Project Agreements For World Class Methanol Plant

Bandar Seri Begawan - Brunei Methanol Company Sendirian Berhad (BMC) today reached an important milestone in the Brunei Darussalam Methanol Project, and in the country’s industrial development, when it signed six project agreements for the construction of a world class methanol plant in Brunei Darussalam.

The project involves a total investment of more than half a billion US dollars, with the construction of the plant itself costing approximately USD400 million. The methanol plant which will have a production capacity of 850,000 metric tonnes/year will be located on a 16-hectare site within an industrial park situated at Sungai Liang.

Present as guest of honour at the signing ceremony which was held at the Jerudong Park Country Club, was the Minister of Energy Yang Berhormat Pehin Orang Kaya Seri Utama Dato Seri Setia Awang Haji Yahya bin Begawan Mudim Dato Paduka Haji Abu Bakar.

The ceremony began with the signing of the gas sales agreement between Mr Hideki Odaka, President of Mitsubishi Gas Chemical Co. Inc (MGC), Mr Grahaeme Henderson of Brunei Shell Petroleum Co. Sdn Bhd (BSP), Mr Kinya Tsuji, Chief Executive Officer of BMC and Mr Eizo Kobayashi, President and CEO of ITOCHU Corporation (ITC).

Under the long term gas sales and supply agreement with BMC, Brunei Shell Petroleum Company will supply natural gas, the main feedstock for the methanol plant.

This was followed by the signing of the land lease agreement between YAM Pengiran Kerma Raja Pengiran Haji Kamarulzaman bin Pengiran Pekerma Setia Diraja Sahibul Bandar Pengiran Haji Ali from the Sungai Liang Authority and Mr Kinya Tsuji of BMC.

Mr Kinya Tsuji and Mr Hideki Odaka also signed the agreements for marketing, technical services, license and catalyst supply.

When BMC was established in March 2006, it conducted a detailed feasibility study for the development of the Brunei Methanol Project. Recently, all the required conditions for the joint venture project were satisfactorily achieved and the final investment decision for the Project was made with the consent of BMC’s shareholders, namely MGC, PetroleumBRUNEI and ITC.

Mr Kinya Tsuji, in his welcoming remark stated that the signing of these agreements marked a historical moment in the industrial history of Brunei Darussalam as it signals the commencement of the realisation of Brunei Darussalam’s first methanol plant and the start of a new industry in the country.

Hj Mohd Ja’afar Hj Awang Bakar, PetroleumBRUNEI’s CEO, in his speech stated that as the sole local shareholder in the Brunei Methanol Company (BMC), PetroleumBRUNEI is proud of the strides that BMC has made to reach today’s milestone in signing the Methanol Project Agreements, said. He also highlighted that the project fitted into PetroleumBRUNEI’s vision of Fuelling the growth for future generation through the utilization of Brunei Darussalam’s natural resources to benefit its people, and improve their quality of life.

Brunei Darussalam is already an established crude oil and natural gas producer in the world petroleum industry. Its second move towards industrialization saw the creation of a liquefied natural gas (LNG) plant in 1973, nearly four decades ago. Today’s signing ceremony to commence construction of a world class methanol plant signifies a major industrial boost to the country.

As the project involves a significant amount of investment, the BMC, through its financing advisor (Bank of Tokyo Mitsubishi UFJ, Ltd.) has successfully negotiated for the Project to be financed by a banking syndicate led by the Japan Bank for International Cooperation (JBIC), on a limited recourse “Project Finance” basis. This international project financing is the first of its kind for Brunei Darussalam.

Mitsubishi Heavy Industries, Ltd (MHI), who signed the Engineering Procurement Construction contract with BMC on 29th March 2007, will construct the methanol plant on a full turnkey lumpsum basis. Construction is due to be completed by the end of 2009, with commercial operations targeted for the second quarter of 2010. The commencement of commercial operation of the methanol plant is expected to place Brunei Darussalam on the world map of global methanol producers.

Methanol is one of the basic chemicals that has a variety of derivatives usage, and is mainly used as a raw material to produce substances such as formaldehyde and acetic acid. It is also expected that the methanol demand will continue to grow with the advancement in other potential applications such as biodiesel and DME (dimethyl-ether) in future. The current world demand for methanol is 36 million tonnes per year, and it has been growing at 3% per annum.

Due to the high Asian economic growth rate, a higher demand is forecasted especially in the region, where BMC aims to export its produced methanol.

Brunei Darussalam is ideally located in the middle of the growing Asian market and BMC’s methanol production is also supported by one of the most competitive natural gas prices. Due to the favourable conditions of both the natural gas price and Brunei Darussalam’s strategic location in Asia, BMC is poised to be one of the most competitive methanol producers in the international market.

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