2004 Oil Price Hike
Industry analysts have long predicted that there will come a
point when global oil production will no longer be able to
keep pace with global demand for oil which now stands at a
record 82.4 million barrels per day.
Growing worldwide demand has inevitably
driven the world's crude oil price skyward that once peaked
at a record high of over US$50 per barrel in 2004, and
according to analysts the high price could perhaps remain
This comes as no surprise as the predicted
worldwide oil demand growth will go up to 60% in the next 25
years with an `economically buoyant' Asia leading the rise.
Surging energy prices are seen as a
potential threat to global economic recovery with the early
victims of the oil price hike being the American motorists
who have to come to terms with high gasoline prices and the
aviation industry where travellers pay higher airfares.
The oil price hike, however, does bring
significant value to Brunei but customers have to deal with
the flip side and the negative impact of high prices. So
whilst Brunei enjoys the benefits in the short-term, the
country needs to ensure the long-term sustainability of its
business and excessively high oil prices are detrimental to
The surging worldwide demand is fuelled primarily by the
economic growth in China, which has surpassed Japan as the
world's largest consumer after the US and will need more
than 10 million barrels of crude oil a day by 2030 from
about 6.3 million barrels per day as reported by the
International Energy Agency.
While the worldwide demand for oil
continues, Liquefied Natural Gas (LNG) will play a bigger
role, which according to the US Minerals Management Service
Director has sharply increased in the past decade because
natural gas is a clean burning fuel source.
In fact, the demand for gas is projected
to exceed the demand for oil by 2020, with LNG needs in
China will reach 20 million tonnes annually by 2015, and
demand in India touching 12.5 million in the same period.
Japan is expected to be the major LNG
importer in the region with 73 million tonnes of import in
2015, while the United States and South America should also
emerge as major importers by then.
This shows that the market demand for
natural gas or LNG should rise very dramatically in the next
10 years or so years to come. Indeed Brunei has already
exported its LNG to South Korea and Japan for over a decade,
and the strong global demand could mean big demand for
Recently Brunei marketed its petroleum to
China and India, among others - meaning that the Sultanate
already has a foothold in the major energy markets of the
Brunei And Oil Gas Export
Brunei crude oil is exported to various countries including
several ASEAN member countries e.g. Indonesia, Singapore and
In year 2002, Thailand is the main export destination for
Brunei Darussalam's crude oil, i.e. 27.28% of the overall
This was followed by Australia (17.3%),
South Korea (16.11%), China (12.46 %), Japan (12.23%) and
others such as USA, New Zealand, Indonesia, Singapore and
According to a Brunei Economic Bulletin
report, it stated that oil and gas exports in the first
quarter of 2004 were $1,828.9m.
This was an increase of 4.7 % from the fourth quarter of
2003, which recorded $1,746.5m.
Petroleum exports (crude and condensate)
increased by 4.8%in the first quarter (Q1) of 2004 on a
quarterly basis, an increase by 9.7 % from Q1 of 2003.
The increase was due to the higher oil prices, which
recorded an average price of $35.6 per barrel in 2004 Q1
compared to $32 in the Q4 of 2003 and $33.4 in Q1 of 2003.
The LNG exports in the first quarter of
this year also showed an increase of 4.5% compared to Q4
2003, according to the quarterly magazine produced by the
Department of Economic Planning and Development (JPKE).
The report also states that it must be
noted though the essential supply of oil in the country will
never simply come to an end as is the case for any other
commodity when supply declines, the price increases, and
where available, lower-cost substitutes will become more
Brunei Shell Petroleum (BSP) - a Brunei Government Royal
Dutch /Shell joint-venture - made an important new oil
discovery three kilometres offshore in the Seria North Flank
and a previously un-drilled part of the field last October
2004, after 75 years since it first oil strike in 1929.
There are up to 20 similar structures in the area, said Mr
Mark Carne, Managing Director of BSP. He estimated total
recoverable oil of up to 100 million barrels from the whole
of the Seria North Flank.
BSP is now proceeding to accelerate
further exploration, appraisal and development of Seria's
It said additional reserves will be booked once technically
and economically matured project plans are approved.
Brunei Shell Petroleum (BSP) a Brunei
Government Royal Dutch/Shell joint venture was for years the
only oil producer and operates the country's only oil
refinery, till a second consortium was set up in the early
80s between Total Fina Elf and locally based Jasra
Total Fina Elf owns 60% of the consortium
that operates in Block J, followed by BHP Billiton with 25%
and Amerada Hess with 15%. The Block K group meanwhile
consists of Shell (50%), Conoco (25%) and Mitsubishi (25%).
Brunei's Oil And Gas Industry
The key players in the country's oil and gas industry are
BSP, BLNG, Block B Joint Venture, Brunei Shell Marketing (BSM),
Brunei Shell Tankers (BST), and Brunei Gas Carrier (BSC)
according to the Petroleum Unit of the Prime Minister's
Office in their paper at the Global LNG Summit in Washington
DC last December 2003.
The biggest of the four is BSP, which is responsible for the
exploration and oil production and natural gas as well as
oil refining and crude oil trading.
BLNG, meanwhile, concerns with liquefying
the gas it buys from BSP as well as arrangements of its
transport and sale to customers in Japan and South Korea.
BST charters tankers to BLNG to transport
gas to Japan while, BSM markets petroleum products, such as
gasoline, diesel, lubricants, and jet fuel. BSM also manages
the import and distribution of lubricants, chemicals and
bitumen into the country.
The government's interest in the oil and
gas industry comes under the auspices of the Petroleum Unit
formed in 2001, with the objective, amongst others, to
strengthen and to push to jointly spearhead the development
of local petroleum industry and to play an active role in
the exploration and development of the petroleum industry.
The Petroleum Unit also accelerates
economic development based on the domestic petroleum
With the Sultanate's plan for economic
diversification away from the dependency on oil and gas as
well as natural gas, the Petroleum Unit has allocated a 1
TCF of gas reserve for the domestic downstream project such
as the Sungai Liang Industrial Park whereby it requires gas
to run the industrial park. --Courtesy of Brunei Year Book