Oil and gas to Brunei

Trends and opportunities

The market

The energy sector is central to Brunei Darussalam’s economy, accounting for more than 60 per cent of GDP. In 2013, oil and gas production in Brunei totaled around 372,000 barrels of oil equivalent per day (BOEPD) (Source: Energy White Paper, Brunei Darussalam, 2014).

According to the Energy White Paper released in March 2014, Brunei aims to maximise the potential of its mature oil and gas fields, and undertake further exploration and development activities, as well as ensuring locals are highly educated and technically skilled to meet industry needs. Three strategic goals and 10 KPIs have been developed for the energy sector, to support the National Vision 2035.

All of Brunei’s gas and 90 per cent of its oil comes from offshore fields.

Brunei Shell Petroleum (BSP) is the largest oil producer in Brunei and is the backbone of Brunei’s economy. It contributes around 90 per cent to Brunei’s oil and gas revenues, which is 90 per cent of total export earnings. Petroleum Brunei is the state-owned national company (Source: BSP Sdn Bhd).

The Petroleum Unit of the Prime Minister’s Office is the regulatory body for the oil and gas industry in Brunei. The oil and gas industry remains the fundamental sector of Brunei's economy and will remain of critical importance for the foreseeable future.

Source: Energy White Paper, Brunei Darussalam, 2014

Brunei historical oil and gas production

Source: EDPMO, Brunei Darussalam, 2014

Opportunities

One of the three strategic goals set by the Energy Department is to strengthen and grow oil and gas upstream and downstream activity.

Offshore areas beyond 200 meters water depth are relatively unexplored. Exploration of new fields and maximizing potential of existing fields is a key strategy, giving opportunity to Australian companies with advanced technology and demonstrated expertise in these fields.

Downstream activity in Brunei centres on methanol production. The EPDMO aims to develop additional downstream opportunities, such as gas-based petrochemicals, crude and condensate-based petrochemicals, producing business opportunities across a range of sectors. The EPDMO has conducted preliminary reviews of a range of options, and is investigating further solutions such as extending the petrochemical chain, and aluminium derivatives. Australian companies with experience in downstream solutions may find Brunei offers significant business opportunities.

Assessment of near-term downstream opportunities

Source: Energy White Paper, Brunei Darussalam, 2014

Brunei National Energy Research Institute (BNERI) was founded in 2011 to support Brunei’s energy security and economic growth through policy research and design, with the aim of becoming an international centre of excellence on energy. Its operations have been centralised at the Science and Technology Department of University Brunei Darussalam. Companies and education providers with an interest in energy research may find exchange and collaboration opportunities.

A key focus of the national energy agenda is ensuring the sector’s development creates employment and business opportunities for locals. Total employment targets for the industry are 30,000 by 2017 and 40,000 by 2035. These targets require a significant increase in the size and skill level of the local labour force, providing opportunities for education and training providers offering industry-relevant qualifications.

Labour supply prediction

Source: Energy White Paper, Brunei Darussalam, 2014

Competitive environment

Brunei tightly controls activity in this sector, as it is central to the economy. Foreign companies must partner with local companies in order to operate in Brunei.

TOTAL, a French oil and gas entity, has a significant stake in Brunei’s oil and gas industry. TOTAL has two companies (Total E&P Borneo, and Total E&P Deep Offshore Borneo) operating in the oil and gas fields.

Malaysia-based Petronas Carigali, Murphy Oil Corporation, Mitsubishi Corporation, and Poland’s Kulczyk Oil have all partnered with local companies in the oil and gas sector, mostly for deep water exploration projects.

Tariffs, regulations and customs

Building local capability and providing opportunity for local companies is one of the energy sector’s three key strategic goals. The aim is to increase current local employment levels from 50 per cent in 2013 to 80 per cent in 2035.

BSP spends about B$ 500 million a year for construction and services, with 60 per cent of this spending allocated to Bumiputera (local Bruneian Malay) companies and 40 per cent to joint venture companies or international companies (Source: BSP Sdn Bhd).

Opportunities very rarely go to tender. Companies seeking work in Brunei are pre-qualified and then registered, and invited to bid on tenders when they arise.

Australian companies interested in tendering for BSP work must either become registered themselves with BSP, or have an agent or local partner that is registered. Companies wishing to register with BSP must follow the guidelines set down by BSP. Only specific categories of work are open to non-Bumiputera companies, and it is necessary for Australian companies to review the criteria to ensure that they meet the specifications.

In August 2013, Brunei introduced Control of Major Accident Hazards regulations that underpin safety and health requirements and provide a common framework for the entire energy industry. These regulations apply to new projects and existing facilities.

Marketing your products and services

Market entry

Entry to the Brunei market requires preparation and patience.

BSP publishes a tender plan on their website, and companies meeting the criteria can apply for vendor registration. After successful registration, the company may be invited to tender for a specific opportunity, which is awarded on merit after an evaluation of all tender proposals.

Australian organisations should have a track record of successful operation, service delivery, and state-of-the-art technological solutions, and be able to offer specialised services, either directly or through outsourcing.

Links and industry contacts

Prime Minister’s Office 
Ministry of Foreign Affairs and Trade
Energy Department
Brunei Shell Petroleum 
Petroleum Brunei
Royal Customs and Excise Department
Australia Brunei Darussalam Business Council
OECD
The International Monetary Fund

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