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A productive year for the energy sector

Publication Date : 19-12-2013

 

From filling up 70 per cent of top positions in the oil and gas industry with qualified Bruneians to discovering new commercially viable gas fields, Brunei’s energy sector has seen a productive year in 2013.

Reports produced by the region’s top organisations provided encouraging indication that the growth of the oil and gas – the main driver of Brunei’s economy – is yet to slow down.

The Ministry of Energy at the Prime Minister’s Office (EDPMO) actively engaged in initiatives on Local Business Development (LBD) which, over the year, significantly resulted in the growth of the number of Bruneians in the oil and gas sector.

In February this year, Zhejiang Hengyi secured regulatory approval from China to build a US$4.32 billion petrochemical refinery plant in Brunei to produce aromatics.

Hengyi Industries Sdn Bhd has also taken steps to hire locals and has been in discussion with higher education institutions to produce graduates in a bid to secure local manpower.

In a March 2013 report, Minister of Finance said the design and engineering plans for the construction of the project were expected to be finalised by mid-2013.

The project’s first phase, he said, is expected to create 800 jobs and once operational, is anticipated to contribute US$2 billion per year to the country’s economy.

Hengyi’s vice president for corporate services for Brunei, Sheikh Rashid Salam in October, told The Brunei Times that the Chinese firm has set its sights on initiating construction work of the petrochemical refinery plant facility “sometime next year” after dredging works began recently.

According to a previous report, the complex will be able to produce 1.5 million tonnes a year of diesel, 400,000 tonnes a year of gasoline, one million tonnes a year of jet kerosene, 1.5 million tonnes a year of naphtha.

Local business development

In January, the EDPMO will accelerate its efforts relating to its Local Business Development (LBD) directives that would see more opportunities for both jobseekers and local companies within the sector this year.

Having surpassed its target last year, the department was hoping to exceed its new target of 1,600 local jobs in the energy sector this year as part of its ongoing initiative to promote local employment, said Minister of Energy Yang Berhormat Pehin Datu Singamanteri Colonel (Rtd) Seri Setia Hj Mohammad Yasmin Hj Umar.

In March, it was announced at the Ninth Legislative Council Meeting that more than seven in every 10 top positions in the oil and gas sector had been occupied by Bruneians. YB Pehin Hj Mohd Yasmin said that this was achieved through the LBD initiative.

EDPMO intends to create 50,000 jobs by 2035, of which 40,000 will be reserved for Bruneian workers, as envisioned in the Energy White Paper.

The LBD framework is aimed at maximising local content, management and employment, to elevate the country’s economy through the use of local goods and services and develop wholly Bruneian businesses which can compete regionally.

Self-sufficiency in energy

In April, a report by the Asian Development Bank (ADB) revealed that fuel subsidies the Sultanate provides its people are among the highest in Asia when considered as a share of its economy.

The fuel subsidies provided by Brunei, which according to the International Energy Agency (IEA) is the biggest net exporter of oil liquids in the Asia Pacific, account for over three per cent of the country’s gross domestic product (GDP) as of 2010, the report stated.

ADB in the “Asian Development Outlook for 2013” also said that Brunei will be among three countries in developing Asia to remain self-sufficient in energy by 2035.

By 2035, most Asian countries will produce less than half the energy they need and many are anticipated to produce only “a tiny fraction”, the report said.

Asia will remain heavily dependent on energy imports, particularly oil, in the foreseeable future and securing adequate and reliable energy supply will persist to be a challenge across the region, it added.

In an index on energy self-sufficiency which assigns a value of 1 to indicate all primary energy demand is met with indigenous resources, and a value of 0 to indicate complete reliance on energy imports, Brunei achieves a full score of 1, alongside Kazakhstan and Azerbaijan.

Energy cooperation with Japan

The Sultan and Yang Di-Pertuan of Brunei Darussalam held a bilateral meeting recently with Prime Minister Shinzo Abe on the sidelines of the Asean-Japan Commemorative Summit in Tokyo. Both leaders sought to build new partnerships in renewable energy as well as small and medium enterprise development.

“We value our longstanding ties with Japan,” said His Majesty at a joint press conference following the bilateral meeting. “Looking forward, we hope to build upon these ties and develop partnership and new industries, including small and medium enterprises as well as alternative and renewable energy.”

The move would support Brunei’s efforts to diversify its economy away from oil and gas, as well as create new jobs.

Cooperation with Malaysia

Following the 17th Annual Brunei-Malaysia Leaders’ Consultation in December, state-owned Petroleum Brunei (PB) will buy a three per cent stake in Malaysia’s shale gas assets in Canada.

Also, a major gas discovery has been made by Petronas in waters off the maritime borders shared by Brunei and Malaysia.

Malaysian Prime Minister Najib Razak was quoted by Malaysia media outlets saying the “significant discovery in Block CA2, would cater to the needs of Brunei LNG”.

Under an existing production sharing agreement signed in 2010, Brunei and Malaysia have agreed to share production and development costs and of cross-border oil and gas fields in Blocks CA1 and CA2 and well as share revenue.


 

 

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