Energy (Oil & Gas)

Brunei is a net energy exporter. The main exports are oil and natural gas. In 1998 Brunei exported an estimated 141,000 bpd of oil and 287 bcf of natural gas.

The oil and gas sector remained the major sector of Brunei’s economy in 1997. The output of the oil and gas sector contributed about 53 percent to Brunei’s real GDP. The export earnings from crude petroleum, refined petroleum products and LNG accounted for more than 92 percent of Brunei’s total export earnings. Brunei’s export earnings from crude petroleum, refined petroleum products and LNG were estimated at $2.3 billion in 1997.

The oil and natural gas industry consisted of three operating companies, Brunei Shell Companies, Elf Aquitaine-Jasra, and Fletcher Challenge Petroleum. In 1997, Brunei Shell Companies conducted oil and gas exploration, produced and refined crude petroleum, produced and processed natural gas, marketed crude petroleum, refined petroleum product and processed natural gas products. Elf and Fletcher only conducted oil and gas exploration in 1997.

Brunei contains proven crude oil reserves of 1.4 billion barrels and produces 191,000 barrels per day (bbl/d) of mainly low-sulfur oil, plus around 22,000 bbl/d of natural gas liquids. This is down from peak production (of around 250,000 bbl/d) reached in 1979. The country is located close to vital sea lanes through the South China Sea, linking the Indian and Pacific Oceans. Oil production peaked in 1979 at more than 240,000 bbl/d, but was cut back deliberately to extend life of the fields and to improve recovery rates. Brunei has seven offshore oil fields, including Champion (which contains about 40% of total oil reserves and produces around 50,000 bbl/d), Southwest Ampa (the oldest field, with more than half of Brunei's gas reserves and production), Fairley, Fairley-Baram, Magpie, Gannet, and Iron Duke, plus two more fields onshore. Major customers for Brunei's oil include Japan, South Korea, Singapore, Taiwan, and Thailand.

Brunei Shell Petroleum (BSP), a 50-50 joint venture between Royal Dutch/Shell and the government of Brunei, for years has been the only oil producer in the country and also operates the country's only oil refinery. A second consortium, this one between TotalFinaElf and Brunei-based Jasra International Petroleum, also has been active in Brunei oil exploration since the 1980s. Oil and gas production from the offshore Maharajah/Lela/Jamaludin field, operated by TotalFinaElf (along with New Zealand's Fletcher Energy), came online in early 1999. In August 2000, Fletcher Energy announced that it was curtailing its Brunei exploration program, begun in April 2000, after its third well, East Egret 1, failed to find any significant amounts of oil or gas.
Oil production began in Brunei in 1929, with the discovery of the giant Seria Field on the coast. Production from Seria peaked at around 100,000 bbl/d in the 1950s. Significant undeveloped oil reserves are believed to remain in Brunei's current producing fields, given the application of advanced technology and modern drilling techniques. Also, as of November 2000, Brunei was planning to offer blocks in its offshore, 200-mile Exclusive Economic Zone (EEZ) for oil and gas exploration in "open areas" (as opposed to disputed areas in the South China Sea/Spratly Islands area). Bidding is set to begin in the first quarter of 2001 and to close in November 2001, with blocks scheduled to be awarded in early 2002. Reportedly, more than a dozen companies have expressed interest in this bidding, which includes what one geologist calls "the best piece of deep water in South East Asia." One possible complication is that Brunei's EEZ overlaps with other countries' South China Sea claims.


Brunei produces around 0.3 trillion cubic feet (Tcf) of natural gas per year, around 90% by BSP and 10% by TotalFinaElf/Fletcher. Brunei began the first Asian liquefied natural gas (LNG) exports -- to Japan -- in 1972. Today, major customers for Brunei's LNG exports include Japan, which takes around 90% of Brunei's LNG exports under a long-term contract renewed in 1993, and South Korea. Brunei hopes to increase its LNG production and exports significantly in coming years. The 50-50 Brunei LNG (BLNG) joint venture between Mitsubishi and Shell produces Brunei's LNG.

Long-term prospects for gas development in Brunei are excellent. BLNG hopes to add 11.5 Tcf of gas to meet its expansion plans, including addition of a new, 4-million-ton-per-year gas liquefaction "train" at its Lumut facility by 2008. Currently, BLNG produces 6.7 million tons per year of LNG. Brunei also is planning on expanding its current fleet of seven specially-designed LNG tankers. Besides exports, Brunei would like to use its natural gas to develop domestic petrochemicals and energy-intensive industries (like aluminum smelting).

Brunei's installed electric generating capacity in 1998 was 0.4 gigawatts (GW), of which all was gas-fired. Brunei's power demand is growing at a rapid rate of around 7%-10% annually. Brunei's power plants all operate single gas turbines, with the exception of the Lumut cogeneration facilities. Also, there are plans to convert the Gadong-11 plant to combined cycle at some point.

In 1998, installed electric capacity was 406 MW. The principal source of electric power is thermal power