Witn a well-stocked energy sector, international buyers are lining up to access Brunei Darussalam’s liquefied natural gas. It will be up to officials to ensure that a balance is struck between fueling overseas demand and supplying the local economy, and in particular, the country’s growing petrochemicals industry, the Oxford Business Group said in its latest report.
Estimates put Brunei Darussalam’s natural gas reserves at around 390 billion cu meters, though this is likely to be extended due to new offshore fields currently being developed. At the present rate of production, the Sultanate has sufficient reserves to maintain output of around 13 billion cu meters for 30 years or more. Increasing demand from existing and potential clients across Asia could shorten this timeline, however, should Brunei Darussalam agree to ramp up exports.
Energy sales are crucial to the Sultanates economy, with gas and oil representing more than 50 percent of the country’s exports and well over 80 percent of GDP.
It is this natural energy wealth that has propelled Brunei Darussalam to fifth on Forbes Magazine’s list of richest nations. The findings of the magazine’s latest survey, released on Feb. 24, put per-capita income in the Sultanate at $48,000, a figure that could rise if overseas buyers have their way.
One of the latest to come knocking on Brunei Darussalams door for additional supply of LNG is the Sultanate’s biggest importer, Japan, which is still striving to bridge an energy deficit due to the shutdown of almost all of its nuclear reactors following the devastating earthquake and tsunami in March 2011. According to Japanese officials, there is still a 10 percent shortfall in electricity supply, with Tokyo hoping Brunei Darussalam can increase LNG shipments to help boost output.
On Feb. 8, Noriyuki Shikata, Japan’s deputy cabinet secretary for public affairs, said his country would welcome additional shipments of LNG from the Sultanate. These short-term measures will help compensate for the loss of generation capacity caused by taking all but three of the country’s 54 nuclear power stations off line. Brunei Darussalam already supplies around 10 percent of Japan’s LNG needs and has briefly stepped up shipments since the disaster.
“We do have real challenges facing us, and as a short-term solution, the increased import of gas is very, very important,” Shikata told journalists in Tokyo. “Of course, we welcome Brunei’s support in this arena. We are importing more LNG and if you have extra capacity, we really appreciate your kind support.”
Taiwan has also expressed interest in the country’s hydrocarbons sector, in particular its downstream industry. In mid-February 2012, Terry Ting, a representative of the Taipei Economic and Cultural Office, said his country was keen to boost imports of gas-related products, such as methanol.
“Statistics show that Taiwan is steadily importing methanol from Brunei every month,” he told local media. “But we are not going to stop there. We want to invest in Brunei’s downstream industry, particularly LNG.”
India is also looking to broaden its LNG sourcing options, with the country’s external affairs minister, S. M. Krishna, saying on Feb. 13 that New Delhi wanted to strengthen cooperation with Brunei Darussalam in the oil and gas sector.
India has indicated its intention to source LNG from Brunei in the near future, possibly in the next one or two years, he said while speaking to journalists taking part in an ASEAN-India media forum.
As one of Asia’s fastest-growing and largest economies, India will require massive amounts of energy, and its domestic gas industry is struggling to keep up with demand. Imports are expected to make up around 50 percent of all consumption by 2030, and while Brunei Darussalam will only be able to supply a fraction of this expanding market, by broadening its client base, the Sultanate will reduce its exposure to localized economic fluctuations.
Additionally, South Korea is keen to renew its existing agreement, which is set to expire in 2013, and both Singapore and Thailand have also expressed interest in importing LNG from the Sultanate.
Brunei Darussalam will have to closely monitor the size and scope of existing and potential deals moving forward. The country is currently stepping up efforts to maximize its earnings from hydrocarbons by expanding its downstream industries.
Having been a regional leader in methanol production since 2010, the Sultanate is also working to attract investments in other petrochemical facilities, such as ammonia and urea production units. It is also using its gas reserves to power other industrial sectors, with an aluminium smelter being one of the projects most commonly cited.
With such increasing demand for its energy resources, Brunei Darussalam will have to balance the need for overseas export revenue to underpin domestic economic growth with the requirement to fuel the local economy. This should aid in the overall diversification and maturation of the wider economy.
(The Brunei Times)
(Asia News Network)
