Brunei is a small country in Southeast Asia, with an area of only 2,286 square kilometers and a population of just over 50,000. However, it is an out-and-out wealthy country: in 2017, the country’s per capita GDP was as high as 28,000. The U.S. dollar, according to the standards of the World Bank, can already be included in the ranks of developed countries.
But this is not the peak of the country’s GDP: Compared with the peak of per capita GDP of US$47,000 in 2012, Brunei’s GDP has dropped by nearly 40%. The reason why the fluctuations are so severe can be understood if you look at the country’s economic structure: in 2014, the country’s oil and gas production and exports accounted for approximately 67% of the gross domestic product. With such a single industrial structure, it’s no wonder that the economy depends on the price of oil.
[Picture] Brunei is famous for its oil and gas resources
Faced with the ups and downs of oil prices, passive acceptance is obviously not the answer, and developing deep processing is the long-term solution. In July 2019, Brunei welcomed the construction of a petrochemical industrial park, CCCC, and the builder of this enterprise was a Chinese private enterprise – Hengyi Petrochemical. This investment is currently the largest Chinese-funded project in Brunei.
Who is Hengyi Petrochemical? The following introduction was found on the official website:
Hengyi Petrochemical is committed to developing into one of the leading domestic and world-class petrochemical industry groups, and long-term persistence, consolidation and improvement of the core of its main business Competitiveness, currently has gradually formed a “polyester + nylon” dual fiber-driven industrial chain and a “petrochemical + multi-level three-dimensional industrial layout”: with the petrochemical and chemical fiber industry chain as the core business, petrochemical finance and petrochemical trade as the growth business, the chemical fiber industry Big data and smart manufacturing are emerging businesses.
If the above introduction seems boring, then the following picture will make it clear:
[Picture] Panorama of Hengyi Petrochemical Industry Chain
As can be seen from the above picture, Hengyi Petrochemical’s current domestic business is mainly concentrated in PTA, Among the three chemical products, CPL and PET, the PTA industry co-organized by Rongsheng not only ranks first in the world in terms of production capacity (28%), but is also nearly twice that of the second-place Hengli Petrochemical (15%). It can be called the leader in the PTA industry. overlord.
[Picture] The status of the top PTA brother in China is difficult to shake (Picture source: Fushan Investment)
Although Hengyi has achieved brilliant results in the three major chemical fields, Hengyi is still not satisfied and wants to develop upstream industries in Brunei. Why did a Chinese petrochemical company invest in and set up a factory in Brunei?
Hengyi Petrochemical has no choice but to expand overseas in Brunei. Expanding into the upstream refining and chemical industry is the company’s established strategy, but until 2014, the country had not yet opened up refining and chemical projects to private enterprises. Should we stay put and wait for the wind to come, or should we go out to sea and chase the wind? Qiu Jianlin, the actual controller of Hengyi Petrochemical, decisively set his sights overseas in search of “oasis”.
China is the world’s largest crude oil importer and second largest crude oil consumer. There is a large gap in crude oil production, and nearly 70% of its oil depends on imports. Qiu Jianlin, who works in the integrated refining and chemical industry, has a deep understanding of this. In his view, obtaining a certain supply of crude oil raw materials means that the company will have greater initiative.
In addition, petrochemical companies’ foreign exchange exposure due to large-scale imports of crude oil has also aroused Qiu Jianlin’s vigilance. “The refinery’s raw materials are imported, which means that a large part of the debt is settled in U.S. dollars; while almost all sales revenue comes from domestic, and the assets are still settled in RMB.” He said with a smile, “The mismatch of assets and debts leads to the exchange rate When there is a fluctuation, the company’s accounts are like dancing to a ‘disco.'”
With the implementation of the Brunei refining and chemical project, the problem has been solved. “We put the midstream and downstream in China and the upstream overseas, forming a ratio of 45% US dollar assets and 55% domestic assets. The asset distribution is more balanced.”
Main device area
At the same time, location conditions, trade freedom, cost advantages, etc. are also important considerations for Hengyi’s site selection. After layers of screening, Brunei entered Qiu Jianlin’s field of vision.
“Brunei has a natural location advantage and low logistics costs. In addition, as a member of ASEAN, Brunei is close to the Southeast Asian refined oil demand market, and product circulation within the region is free. Tariffs. By purchasing crude oil nearby and selling refined oil products nearby, we can achieve freight savings at both ends of production and marketing,” he said.
“The main cost of the refinery is energy cost.” Qiu Jianlin said, “The thermal coal of our Brunei refinery comes from Kalimantan, and the electricity and steam prices are low. Self-operated Compared with the domestic on-grid electricity price, the power plant has an advantage of 5 cents to 6 cents per kilowatt hour. With a scale of more than 1 billion kilowatt hours of electricity per year, the cost savings are significant.
11, 2019 In March, the US$3.45 billion Brunei PMB Petrochemical Phase I project was officially put into production and began to contribute benefits. The company expects that in 20Joint research and development platforms such as the Institute and Hengyi Research Institute of Donghua University provide innovative power for long-term development by building a new technological innovation system that combines industry, academia, and research. “It is useless to talk about research and development. To be truly responsible for the company and the country, we must rely on hard work.” Qiu Jianlin said with emotion.
As for the future, Qiu Jianlin made no secret of the current situation of overcapacity in the industry and the trend of accelerating reshuffle. Hengyi is ready to fight a tough battle. “Our goal is to strive for an output value of over 500 billion yuan and become one of the world’s top 500 companies on the occasion of the 50th anniversary of the founding of the company.” Qiu Jianlin said that as an industry leader, Hengyi must continue to be like the first person to climb Mount Everest. Pathfinding. Hengyi can go further and will definitely go further. </p
