Premier oversees signing of crucial documents during landmark trip

BANDAR SERI BEGAWAN, Brunei - A number of energy agreements were signed on Monday as Premier Wen Jiabao wrapped up his visit to Brunei, the first by a Chinese premier to the Southeast Asian nation.

Premier Wen Jiabao with Brunei's Sultan Hassanal Bolkiah in Bandar Seri Begawan on Monday. The two countries signed a number of trade deals.[Photo/Xinhua]

A memorandum of understanding covering energy cooperation between the two governments was among the documents signed at Brunei Palace.

China National Offshore Oil Corp (CNOOC) also signed a deal with Petroleum Brunei for "gas and oil commercial cooperation". No details of the two documents were released, while CNOOC gave no further information to China Daily.

Brunei is the third-largest oil exporter in Southeast Asia and the world's fourth-largest natural gas exporter.

Though it has a territorial dispute with China over a small area in the South China Sea, Brunei has maintained a low-profile stance on the issue and stressed it should be settled through mutual consultation.

Other cooperation documents ranged from forestry to health. The premier and Sultan Hassanal Bolkiah officiated at the signing ceremony.

During Wen's two-day stay in Brunei, according to the Borneo Bulletin newspaper, Brunei Shell Petroleum also signed a non-binding memorandum of understanding with China's Zhejiang Hengyi Group to supply crude oil to a $6 billion refinery, planned in Brunei, and purchase oil products from the plant.

Zhejiang Hengyi and China's Sinopec Engineering Inc had earlier agreed to develop an oil refinery and aromatic cracker plant in Brunei's Pulau Muara Besar, an island situated in Brunei Bay.

The project will be the largest Chinese investment in Brunei to date.

The refinery project was expected to aid the growth of Brunei's energy sector through the production of petrochemicals and the creation of opportunities for other downstream industries, the report said, quoting a statement from the Brunei Economic Development Board.

The facilities would involve an initial investment of $2.5 billion and have a production capacity of about 135,000 barrels a day. A further $3.5 billion would be invested during the second phase to expand the facilities.

The whole project will create about 1,200 job opportunities in the country with a population of 406,000.

"We are confident in making this a world-class project," Qiu Jianlin, Zhejiang Hengyi Group's chairman, was quoted as saying.

He said his company is on target to begin construction work in Brunei next June.

During a speech at Universiti Brunei Darussalam shortly after his arrival in Brunei on Sunday, Wen proposed deepening economic ties with Brunei, including cooperation in offshore oil and gas exploration, as well as upstream and downstream energy cooperation.

China has insisted that territorial disputes in the South China Sea should be settled through negotiations between countries directly involved. It has also proposed to "put aside disputes and engage in joint exploitation" in the disputed area.

Wen went to Brunei to celebrate the 20th anniversary of the establishment of diplomatic ties, after three days on the Indonesian resort island of Bali attending the ASEAN and East Asia summits. The premier arrived in Beijing on Monday afternoon.

Luo Yongkun, a Southeast Asian studies fellow with the China Institutes of Contemporary International Relations, said China is consistent in its stance toward exploiting resources in the South China Sea: any operation should be mutually beneficial and not destabilize the region.

The gas exploitation, if it is in the South China Sea, could offer an example for other disputes in the region, according to Luo.

"Only through tangible cooperation can we have the chance to understand each other and prove that projects can benefit both parties," Luo said. "Without such efforts, trust cannot be built."

Reuters, Zheng Yangpeng and Zhou Yan in Beijing contributed to this story.