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Brunei  

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Last Updated: March 2016

Overview


Map of Brunei
Map of Brunei
  • Brunei's small, wealthy economy is based heavily upon proceeds from exports of crude oil and natural gas. Brunei relies on hydrocarbon revenues for nearly two-thirds of its gross domestic product and the vast majority of its merchandise exports and government revenues. Lower international oil prices since late 2014 have dampened the country's export revenues. However, the government intends to bolster investment in its oil and gas sector and diversify the country's economic base by promoting growth in other industries over the long term.
  • Brunei's government latest energy policy from 2014 includes attracting US$50-$57 billion in foreign investment over the next 20 years in hopes of boosting the country's oil and gas reserves and production levels and diversifying the country's energy supply.

Petroleum and other liquids

  • Brunei's proved oil reserve estimate was 1.1 billion barrels as of the beginning of 2016, the fourth highest in Southeast Asia, according to the Oil and Gas Journal (OGJ). Through its long-standing joint venture with Royal Dutch Shell, Brunei has produced oil and natural gas for several decades, primarily from two large, mature fields - Southwest Ampa and Champion - in the offshore Baram Delta. After reaching a peak of 221,000 barrels per day (bbl/d) in 2006, Brunei's petroleum and other liquids production has declined by nearly half to an estimated 125,000 bbl/d in 2015. Many of Brunei's currently-producing oil and natural gas fields are aging, and much of the shallow waters around the country have been explored. Also, several oil facilities have been undergoing refurbishment over the past few years. Maintenance of these facilities is scheduled to be completed by 2016 at the earliest, which could allow production to recover some recent losses.
  • Brunei has an interest in hydrocarbon development in the South China Sea (SCS), and it makes only one claim in the hotly contested Spratly Islands - the Louisa Reef, a small island that is part of the country's exclusive economic zone and is located in the southeastern part of the Spratly Islands. The Louisa Reef also lies within China's 'nine-dash line', a sizeable claim to the South China Sea which also encompasses all of the Spratly Islands. An offshore settlement with Malaysia in 2010 allows Brunei to explore untapped and formerly disputed deepwater areas in the Baram Delta (namely Commercial Areas 1 and 2) and issue more production sharing contracts to help prop up oil and natural gas production and offset declines from older existing fields. Petronas of Malaysia and Brunei National Petroleum Company (Petroleum Brunei) signed a 40-year agreement in 2010 to jointly explore these two blocks. In 2013, PetroleumBrunei and Petronas of Malaysia signed several cooperation agreements for joint development of oil and natural gas fields in both countries' deepwater offshore areas. The national oil companies of both countries are actively exploring and anticipate hydrocarbon production in the joint commercial areas to begin by 2021.
  • Despite the recent decline in production, Brunei is the largest net exporter of petroleum liquids in the Asia-Pacific region given the country's minimal domestic consumption. In 2015, Brunei's net exports of total liquids were about 110,000 bbl/d, primarily crude oil sent to key Asian oil consumers, including Indonesia, Japan, South Korea, China, and Malaysia. Brunei plans to expand its refinery capacity, as Chinese company Zhejiang Hengyi Group has plans to construct a new refinery with a capacity of 148,000 bbl/d. However, the project has encountered several delays since 2011. If built, this new facility could shift the dynamics of the country's oil exports in favor of consuming more crude oil and exporting more petroleum products.

Natural gas

  • Brunei's proved oil reserve estimate was 13.8 trillion cubic feet as of the beginning of 2016, according to the Oil and Gas Journal (OGJ). Brunei produced about 419 billion cubic feet (Bcf) of marketed natural gas in 2014, following a steady decline from a high in 2011 of 452 Bcf. Most of the natural gas output is from Southwest Ampa, Champion, and other fields associated with oil production. Although domestic gas demand has increased steadily in the past decade, Brunei still exports on average about three-quarters of its output. French major Total, made significant natural gas and condensate discoveries in Block B in 2010 which could bolster Brunei's natural gas reserve base, sustain its production levels, and support LNG exports over the next decade. The company plans to add about 30 Bcf/y of production from its second phase of production from the Maharaja Lela field development in 2016 to help offset natural declines and extend the field's output to 2035.
  • Brunei has been a stable and long-term liquefied natural gas (LNG) exporter to Japan and Korea from its 5-train, 950 million cubic feet per day Lumut LNG liquefaction plant. Brunei exported about 317 Bcf in 2015, a 6% increase from 2014. However, exports have not fully recovered after an 11% drop between 2013 and 2014 as a result of contract changes and growing domestic demands. South Korea and Japan renewed several of their long-term contracts in 2013 for significantly shorter terms, and Japan reduced its contracted volumes. These new contracts are set to expire by 2023. The drop in contracted LNG exports has prompted Brunei LNG to sell to other regional buyers and seek short-term contracts or spot cargo sales. Brunei LNG signed a 10-year contract with Petronas of Malaysia starting in 2013 and began sending spot cargoes to other Asian consumers, including India, China, and Taiwan. Brunei's increasing domestic demand for natural gas from the power and petrochemical sectors is likely to compete with LNG exports, and more of the country's gas production could shift to domestic needs.

Electricity

  • Natural gas fuels virtually all of Brunei's electricity generation. However, the country is seeking to diversify its generation mix by building more renewable generation capacity, mainly through photovoltaic power plants and waste-to-energy projects. Brunei also has plans to import electricity through a potential transmission line from Malaysia.