German firm Ferrostaal eyes Spark project

National 2 minutes, 18 seconds

BANDAR SERI BEGAWAN

MAN Ferrostaal AG, a German builder of petrochemical plants, is one of the three potential investors keen on the government's plans to develop a world-class petrochemical hub at the Sungai Liang Industry Park (Spark), The Brunei Times yesterday learned.

In an interview, Klaus Starke, director, and Erwin Keutner, management board member at Ferrostaal, said the firm has been eyeing Brunei since 2000, a time where gas allocation was unavailable for downstream activities.

"Now there is one TCF (trillion cubic feet) of gas made available for downstream activities. Half of it has already been secured by an investor in the park. We hope to secure the other half," said Keutner.

"We hope to get a gas allocation, build an ammonia plant, plus further downstream plants for products such as melamin," he added.

According to Starke, 0.5 TCF was secured by the Brunei Methanol Company, the first tenant at Spark securing a 16-hectare lot for its operations.

Keutner said Brunei is well-positioned to develop its downstream industry given its gas reserves. The downstream industry involves the post-production phase of oil and gas operations.

"The downstream investment in Brunei makes sense where there is liquefied natural gas (LNG), being sold and exported without having value added. Like the oil, which you take from the ground, ship it to countries like Europe, the US or Japan, for it to be converted to more valuable products," Starke said.

"You can convert the gas in Brunei to a value-added product. You will have additional value created within the country, creating additional wealth and benefits," he added.

In explaining the viability of the downstream industry, he noted that one million BTU of gas converted to LNG can be sold at $7. "If you convert the gas into petrochemicals like ammonia or methanol where per million BTU, it could achieve, with today's prices ... about $15," he said.

"If you go further downstream, where among them we have the technology for melamine, at today's prices it is about $137 per million BTU for the same molecule," he added.

Ferrostaal is primarily involved in building and investing in petrochemical plants. It has operations in Indonesia, Malaysia, Singapore, Vietnam and China. It also has experience in setting up plants in oil-rich states such as Oman, in the Middle East and Trinidad, Tobago in southern Caribbean.

Currently, Ferrostaal is developing a big petrochemical complex in southern Caribbean, similar to its plan for Brunei. "Similar to our plans for Brunei, we would start with ammonia. Use the ammonia as feedstock for further downstream applications," said Keutner.

"We are ready anytime from now, as soon as we have the gas allocation, the earlier the better," he said.

The Brunei Times