Brunei and fossil gas

From Global Energy Monitor
This article is part of the Global Energy Monitor coverage of fossil gas

Brunei is a small country with a population of 0.4 million.[1] After contracting by 2.3% in 2022 due to the COVID-19 pandemic, the country's GDP growth rate is forecasted to be 2.6% in 2023.[2]

Brunei's economy is heavily based on exports of oil and gas, as about 60% of its GDP comes from gas and crude oil exports.[3] Consequently, there have been efforts to plan out ways to diversify the economy.[4] In its 2021 Economic Blueprint for Brunei, the Ministry of Finance and Economy (MOFE) set out five key areas for economic diversification: downstream oil and gas, food, tourism, info-communications, and technology (ICT).[5]

Fossil Gas in the Fuel Mix

Brunei produced 4,450.77 GWh of electricity in 2021.[6] Power generation is supplied almost entirely by fossil gas, with 98% of electricity generated using gas and the remaining from diesel and solar PV.[7]

Downstream activities in the oil and gas sector have historically centered around methanol production at Brunei Methanol Company (BMC)[5]. In an effort to diversify its economy, Brunei is pushing for developments in the petrochemical industry.[4] Brunei Fertilizer Industries (BFI), a state-owned company, started commercial production at Sungai Liang Industrial Park in 2022. The plant is one of the largest fertilizer plants in Southeast Asia, and BFI plans to export to the agriculture industry.[8][5] Henghi Industries commissioned the refinery and integrated petrochemical complex with a capacity of 175,000 barrels per day in 2019. They are also constructing the second phase, which will increase the capacity to 280,000 barrels per day. [9][5] Increasing domestic demand for gas from the power and petrochemical sectors could likely shift some of the country's gas production from LNG exports to domestic consumption needs.[3]

In its most recent Nationally Determined Contribution (NDC) submitted in December 2020, the country committed to a 20% emissions reduction by 2030, relative to business-as-usual (BAU) levels. Brunei also pledged to achieve net-zero emissions by 2050 at the COP26 in Glasgow, Scotland, United Kingdom in November 2021.[5]

Fossil Gas Production, Imports, and Transportation

Total gas production in Brunei, as of 2021, was 11.5 bcm, of which 7.6 bcm was exported as LNG while the remainder was consumed domestically.[10] The largest LNG importer from Brunei was Japan (5.8 bcm), followed by China (0.9 bcm), Malaysia (0.3 bcm), South Korea (0.3 bcm), Thailand (0.3 bcm), and Taiwan (0.1 bcm).[10]

The LNG is exported via the Brunei LNG Terminal, which has a capacity of 7.2 mtpa.[11] It has been operational since 1972.[12]

As of 2020, Brunei had 7.9 trillion cubic feet of proven gas reserves, with a reserves/production ratio of 17.6.[10] At average current production levels, Brunei's proved gas reserves were forecasted to have 18 years of production.[10][5]

In 2017, Brunei Shell Petroleum made the largest onshore oil and gas discovery in decades with its Layang-Layang well in the Seria field. This discovery has the potential to generate revenue equivalent to 15% of the country's budget.[13]

In 2019, Brunei announced financing for developing oil and gas fields as it sought to increase petroleum production by 30 percent by 2025. As part of this exploration effort, the minister announced they would start drilling five new exploration wells.[14]

In 2010, an offshore agreement with Malaysia was signed to allow Brunei to explore deepwater areas in the Baram Delta.[3] In February 2020, Malaysia revoked a cross-border agreement with Brunei to jointly develop offshore fields due to issues with the proposed revenue-sharing split. Petroleum Brunei had been seeking to develop a cluster of gas fields with Petronas, the Malaysian gas company, in order to supply new feedstock to the Brunei LNG plant. [15]

In March 2022, energy minister Mat Suny bin Mohd Hussein announced that the country is planning to increase its production of oil and gas after the discovery of 42 million barrels of oil equivalent last year. [16]

Government Agencies and other Key Players in Gas Sector

Brunei Shell Petroleum is the largest oil and gas producer in Brunei and the backbone of the economy, contributing 90% to Brunei's oil and gas revenues.[17]

Petroleum Brunei is a state-owned national company.[17]

TOTAL, which operates in the oil and gas fields, also has a significant stake in Brunei's oil and gas industry. [17]

In April 2020, the Brunei government formed the Petroleum Authority to regulate the country's oil and gas industry. Petroleum Authority undertakes regulation and monitoring of operations and infrastructure in the upstream, midstream, and downstream oil and gas sectors.[18]


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