Chinese petrochemical company, Hengyi Petrochemical, is moving ahead with its capacity expansion plan for the Brunei oil refinery to include new units specifically earmarked for petrochemical production. China has been developing relations with existing partners to develop its presence in the global energy market, as the US ousting of Venezuelan President Nicolás Maduro has revealed the need to diversify energy developments across the world for China.
Hengyi to double the size of the Brunei refinery in an attempt to increase output capacity
The Chinese energy company has approved the development plan to expand the Brunei refinery, which came online last year following several years of the project being delayed by the developer. The global energy market has been sent into a tailspin following the latest military intervention by the United States in Venezuela.
Hengyi has noted its intention to dramatically increase the output capacity at the Brunei refinery over the coming years. The plan, according to the company, is to essentially double the capacity from eight million tonnes at the moment to 20 million tonnes by 2028.
The move, which has been praised by insiders, will be partly financed by loans and significant tax breaks from the Brunei government. Brunei’s closest energy business relationship has been with the United Kingdom, which, up until the 1980s, held the nation under as a protectorate.
Brunei is strategically important for the development plans of China
Brunei is a tiny nation that sits on the edge of the Indonesian-Malaysian archipelago in the South China Sea and holds vast potential for petrochemicals production as well as oil exports. For decades, the UK has been the largest investor in Brunei’s energy sector, but it was overtaken by China last year as the nation aims to diversify energy projects and increase output capacity across its portfolio.
“China’s energy is very much focused on coal, and the economy is very focused on heavy industry, which is carbon intensive, so restructuring won’t be easy.” – Ma Jun
China and Brunei have established a new joint venture to advance the refinery expansion
The state of Brunei and the Chinese conglomerate Zhejiang Hengyi have established a new joint venture to advance the expansion plans for the Brunei refinery. The refinery will benefit from its involvement in China’s new $1.3tn Belt and Road Initiative (BRI), which aims to provide finances for development projects that serve China’s interests across the world.
In a rare move that outlines the potential the project has, the Sultan of Brunei visited Beijing to hold discussions with Chinese officials; similarly, China’s President, Xi Jinping, passed through Brunei on a state tour in 2019.
The plan is to expand the already impressive Brunei refinery to include new units for petrochemical production, including a polyethylene terephthalate unit, as well as a paraxylene processing unit. The recent tenth anniversary PRC forum in Europe has outlined expansion measures for the petrochemical production market.
The developer has stated that the expansion project may take up to three years to complete, and the second phase of the expansion program will require a sizable investment of approximately $13.6 billion.
“This project fully utilizes overseas strategic oil resources to create new business growth points for the company.” – Hengyi Petrochemical
A new era of expanded petrochemical production has emerged in 2026
As Brunei aims to expand its refinery in the near future, other nations nearby have taken a similar approach to the petrochemical sector. India is advancing the Pachpadra mega-refinery and petrochemical complex, which is being developed by India’s HPCL Rajasthan Refinery. 2026 is set to see the vast majority of nations around the world increasing spending on petrochemical production as demand is set to reach new heights this year and further beyond.
