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Last Updated: March 2017

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 about 60% of its gross domestic product and about 90% 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 end 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 (b/d) in 2006, Brunei’s petroleum and other liquids production has declined by nearly half to an estimated 115,000 b/d in 2016. 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, refurbishment work at several oil facilities over the past few years contributed to recent oil production declines. Currently, enhanced oil recovery projects, such as Champion Waterflood Project, are underway and could help offset some of Brunei’s natural production declines in the next several years.
  • 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 located in the southeastern part of the Spratly Islands which is part of the country’s exclusive economic zone. 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.
  • Brunei exports most of its petroleum liquids output, primarily to key Asian oil consumers, given the country’s minimal domestic consumption. Brunei’s consumption of total liquids has averaged about 17,000 b/d over the past several years, some of which is met by a small domestic refinery. Chinese company Zhejiang Hengyi Group plans to construct a new refinery and petrochemical complex with a capacity of 148,000 b/d by 2019 in Brunei. 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 11 trillion cubic feet as of the end of 2016, according to the Oil and Gas Journal (OGJ). Brunei produced about 424 billion cubic feet (Bcf) of dry natural gas in 2015, up from 390 Bcf in 2014. Most of the natural gas output is from Southwest Ampa, Champion, and other fields associated with oil production. These fields are maturing, and Brunei will need to accelerate its exploration and development to sustain current natural gas production levels after the next decade. Although domestic gas demand has increased steadily in the past several years, Brunei still exports more than 70% of its output. Development of potential industrial and petrochemical projects could shift more of the country’s gas supply to domestic demand in the long run.
  • French energy major Total and its joint venture partners, made significant natural gas and condensate discoveries in offshore Block B in 2010 which could bolster Brunei’s natural gas reserve base, sustain its production levels in the short term, and support LNG exports over the next few years. The company added about 30 Bcf/y of production from the second phase of production at the Maharaja Lela field development in 2016 to help offset natural declines and extend the field’s output past 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 300 Bcf in 2016. Exports have fallen from 336 Bcf in 2013 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 electric generation capacity, mainly through photovoltaic power plants and waste-to-energy projects. Brunei aims to generate 10% of its electricity from renewable sources by 2035. Brunei also has plans to import electricity through a potential transmission line from Malaysia.