Far East: Brunei

FAR EAST

Tony Sitathan, Contributing Editor, Singapore (Indonesia, Malaysia, Thailand, Viet Nam, Myanmar, Brunei, Cambodia and MTJDA)

Brunei

Brunei’s economy is very dependent on its vast oil / gas reserves. So far, it has proven crude / condensate reserves of over 1.2 Bbbl, enough to last till 2015, or until more offshore discoveries are made. Its GDP growth has declined since the hey days of the early ’80s. Last year it recorded growth of 3.5%

As of November 2000, Brunei intends to offer blocks in its offshore, 200-mile Exclusive Economic Zone (EEZ) for oil / gas exploration in open areas. Bidding is expected to begin in first-quarter 2001 and end in November. Blocks will be awarded in early 2002 – at least a dozen companies have expressed interest. According to one geologist, this is considered "the best piece of deep water in South East Asia." Brunei is currently the fourth-largest exporter of LNG in the Asia-Pacific region behind Indonesia, Malaysia and Australia.

Exploration. The government has offered two deepwater blocks, with a combined 20,000 km² and an onshore block of 10,000 km². This is meant to develop its upstream capabilities and at the same time build competency and create new employment opportunities. So far, 14 oil majors have shown interest in this part of the new oil / gas plan to invite more participants. However, there are no plans to change its 50% partnership in Brunei Shell Petroleum (BSP) in upstream activities, as well as its downstream 7.2 million mt/year Lumut LNG plant.

Development. Brunei produces around 190,000 bopd oil / condensate, plus 1.1 Bcfd gas, with 90% coming from BSP and 10% from TotalFinaElf and Fletcher Challenge (now Shell). Brunei wants to increase its LNG production and exports in coming years. The 50-50 Brunei LNG (BLNG) joint venture between Mitsubishi and Shell produces the bulk of its LNG. BLNG intends to add 11.5 Tcf gas to meet its expansion plans, including adding a new 4 MMt/yr gas liquefaction train at its Lumut facility by 2008.

BSP has been the largest operator. Its production comes mostly from West Ampa, Champion and Seria, in shallow waters off Brunei. Besides BSP, TotalFinaElf (TFE) is the only other operating company, having begun gas production from the Maharajh-Lela Jamalulalam concession in April 1999. Other companies found in Brunei are Fletcher Challenge Energy (now Shell), Unocal, MobilExxon, Superior, Arco (now BP), Jasra Jackson, Woods Petroleum, Sun and Jasra International.

To release additional offshore areas, Petroleum Geo-Services has been awarded a 10,000 km², exclusive Multi-Client 3-D (MC3D) contract in deepwater Brunei. This initial survey will employ 10 streamers, each 6,000 m long, the longest used in the Asia Pacific region. This survey will be used for the deepwater licensing to be awarded in fourth-quarter 2001.

The open acreage is located both onshore and offshore within the EEZ. There are two offshore blocks under consideration: Deepwater Brunei Block J (5,020 km²) and Block K (4,994 km²), plus onshore Block L (2,252 km²). To date, it is surprising that no wells have been drilled in the areas on offer. The closest being BSP’s Merpati 1, which encountered gas / condensate and oil in shallow targets.