Defense Professionals on 17th August 2009 reported the following:
+++++
Royal Brunei Air Force becomes first customer for BAE Systems military flying instructor training
BAE Systems has expanded its unique military flight instruction program at the company’s Tamworth Flight Training Centre with the announcement that the Royal Brunei Air Force (RBAF) has become its first customer for flying instructor training.
Two pilots from No 3 and No 5 Squadrons of the RBAF graduated at Tamworth on 7 August as Qualified Flying Instructors after attending an intensive, specially designed six-month course.
According to Lieutenant (U) Ak Mohd Zulhusmi Bin Pg Mohd Roslan from No 3 Squadron, “The Qualified Fixed Wing Course which I have undergone here at BAE Systems Tamworth has been of the highest standard.”
The RBAF has engaged BAE Systems to train its flying instructors, a move welcomed by John Quaife, General Manager of Aviation Solutions.
Mr Quaife said today that BAE Systems was the only private company capable of delivering this military instructor qualification course.
“Most air forces, including Australia’s, train their own flying instructors from within their own resources.
“For smaller air forces that require limited numbers of Flying Instructors, maintaining the overhead of a Central Flying School can be difficult, hence they often look to their allies and partners for help. The more usual solution is for military to military arrangements to be employed using the Central Flying School of the larger air force.
“However, at Tamworth, BAE Systems has been able to develop a capability to deliver a complete Qualified Flying Instructor training program for the RBAF.
“BAE Systems also trains Republic of Singapore Air Force (RSAF) qualified instructors to obtain their CASA Commercial Pilot Licence and Instructor ratings.”
“We are able to offer a turn-key solution – delivering all ground training, flying training, accommodation and messing arrangements, backed up by our experience as a military flight training provider to the Australian Defence Force since 1994.
“This unique training package is another good example of the depth of capability offered by BAE Systems at our Tamworth facility and also reflects well on the abilities of our instructional staff,” Mr Quaife concluded.
+++++
  |   |
Thursday, August 20, 2009
Tuesday, August 18, 2009
Brunei Darussalam: Ready for Take-Off
The Oxford Business Group on 18th August reported the following:
+++++
Brunei Darussalam: Ready For Take-Off
18 August 2009
Brunei Darussalam has long harboured ambitions of becoming a major transport and trans-shipment hub for the East ASEAN Growth Area (BIMP-EAGA), as well as taking an increased slice of the trade from regional giants such as China and Singapore.
To this end, Brunei Darussalam has been developing its transport infrastructure as part of its long-term programme to expand and diversify the economy. While much of the focus of this programme has been on the $1.5bn Pulau Muara Besar port development, the Sultanate is also looking to capitalise on its central position in the region to build up its air freight capability and tourist-handling capacity.
There had been speculation in the local media in the preceding months that the government might construct a second international airport in the Belait district, though with the minister's announcement it now seems this proposal has been shelved in favour of expanding the capacity of the existing Brunei International Airport (BIA).
In late March, the government ruled out a proposal to build a new airport to cater for the growing airborne tourism and freight traffic, with the minister of communications, Pehin Dato Haji Abu Bakar Haji Apong, saying there was not sufficient space to devote to constructing a new facility.
"A consultant was assigned to monitor the situation recently but due to the amount of land needed to build a new airport, which is 8 km by 5 km, the plan was set aside, and a plan has been handed over to a local consultant for the expansion of the existing airport," the minister said on March 23.
Rather than build a new airport, the focus of upgrading Brunei Darussalam's air transport infrastructure would be on the BIA, he added.
And this capacity is in need of building, at least in passenger-handling terms, with the BIA having reached its planned limit of 1.5m arrivals and departures in 2007. Under a master plan drafted over the past two years, BIA is to undergo a $363.5m facelift to upgrade it to the status of an airline and cargo hub, giving it the capacity to process 4.5m passengers a year by 2024, with the potential to expand to 6m by 2030.
Just as importantly, the plan also includes a major expansion of the BIA's freight-handling infrastructure, which unlike its passenger processing facilities is currently underutilised.
The move would be a timely one if Brunei Darussalam is to achieve its ambition of being an airfreight hub and could help revive the dwindling air cargo export trade, which has seen volume drop by more than 50% in the past six years.
According to a report issued by the Brunei International Air Cargo Centre (BIACC), the company established in 2001 to handle air cargo activities into and out of the Sultanate, outgoing freight levels have fallen from 2869 tonnes exported in the 12 months ending March 2004 to 1260 tonnes in the April 2007-March 2008 period.
Though levels of cargo imports only registered a minor fall, easing 1% from the 7719 tonnes flown in during the April 2003-March 2004 period to 7627 tonnes in the year ending March 2008, this flat line contrasted with the steady expansion of Brunei Darussalam's economy over that period.
Among the reasons cited by Ariffin Hj Emran, the general manager of BIACC, for the downturn in cargo movements, especially exports, was the decline in the country's once-vibrant textile sector and the shift by national flag carrier Royal Brunei Airlines (RBA) to using smaller aircraft in 2003 and 2004.
"Since 90% of air cargo is handled by RBA, their refleeting programme definitely had an impact on cargo throughput," Ariffin said in an interview with the Brunei Times on July 8. "In the past, bigger planes like the 767s were used for regional routes but RBA has downscaled its fleet."
This downsizing has reduced RBA's cargo-carrying capacity, with the airline's newer fleet, consisting of six Boeing B767-300s, two Airbus A320s and two A319s, having less space for freight, he said.
While RBA's own cargo-carrying capacity may have been reduced in recent years, a new firm has stepped in to fill at least part of the gap. In mid-June, Syabas Aviation, a newly formed local company, began cargo services out of BIA, flying twice a week to Singapore using two leased Antonov freight haulers.
Sheikh Abas bin Sheikh Mohamed, Syabas' chairman, believes that the airline can tap into a growing niche market, saying there is an increasing demand for quick movement of special cargos.
"Petroleum exploration, for instance, requires logistical products such as drilling parts," he told local media on June 12. "Certain work at the oilfield needs to be speeded up and faster delivery is required."
Though stressing that Syabas was not competing with the existing air cargo flights, merely complementing existing services, Sheikh Abas said that for the first time in 30 years, Brunei Darussalam now had a dedicated air forwarding service.
As is the case with maritime cargo services, Brunei Darussalam will always face stiff competition across the region as it seeks to gain a greater slice of the airfreight market. Both Thailand and Malaysia have embarked on projects to expand the freight-handling capacities of some of their major airports, while Singapore's Changi Airport has a total airfreight capacity of around 4m tonnes.
With improvements and upgrades in the works, BIA's cargo-handling capacity is expected to boost the local economy and allow the airport to service the freight needs not only of the Sultanate itself but also of the nearby Malaysian states of Sabah and Sarawak, and further across the BIMP-EAGA.
+++++
Brunei Darussalam: Ready For Take-Off
18 August 2009
Brunei Darussalam has long harboured ambitions of becoming a major transport and trans-shipment hub for the East ASEAN Growth Area (BIMP-EAGA), as well as taking an increased slice of the trade from regional giants such as China and Singapore.
To this end, Brunei Darussalam has been developing its transport infrastructure as part of its long-term programme to expand and diversify the economy. While much of the focus of this programme has been on the $1.5bn Pulau Muara Besar port development, the Sultanate is also looking to capitalise on its central position in the region to build up its air freight capability and tourist-handling capacity.
There had been speculation in the local media in the preceding months that the government might construct a second international airport in the Belait district, though with the minister's announcement it now seems this proposal has been shelved in favour of expanding the capacity of the existing Brunei International Airport (BIA).
In late March, the government ruled out a proposal to build a new airport to cater for the growing airborne tourism and freight traffic, with the minister of communications, Pehin Dato Haji Abu Bakar Haji Apong, saying there was not sufficient space to devote to constructing a new facility.
"A consultant was assigned to monitor the situation recently but due to the amount of land needed to build a new airport, which is 8 km by 5 km, the plan was set aside, and a plan has been handed over to a local consultant for the expansion of the existing airport," the minister said on March 23.
Rather than build a new airport, the focus of upgrading Brunei Darussalam's air transport infrastructure would be on the BIA, he added.
And this capacity is in need of building, at least in passenger-handling terms, with the BIA having reached its planned limit of 1.5m arrivals and departures in 2007. Under a master plan drafted over the past two years, BIA is to undergo a $363.5m facelift to upgrade it to the status of an airline and cargo hub, giving it the capacity to process 4.5m passengers a year by 2024, with the potential to expand to 6m by 2030.
Just as importantly, the plan also includes a major expansion of the BIA's freight-handling infrastructure, which unlike its passenger processing facilities is currently underutilised.
The move would be a timely one if Brunei Darussalam is to achieve its ambition of being an airfreight hub and could help revive the dwindling air cargo export trade, which has seen volume drop by more than 50% in the past six years.
According to a report issued by the Brunei International Air Cargo Centre (BIACC), the company established in 2001 to handle air cargo activities into and out of the Sultanate, outgoing freight levels have fallen from 2869 tonnes exported in the 12 months ending March 2004 to 1260 tonnes in the April 2007-March 2008 period.
Though levels of cargo imports only registered a minor fall, easing 1% from the 7719 tonnes flown in during the April 2003-March 2004 period to 7627 tonnes in the year ending March 2008, this flat line contrasted with the steady expansion of Brunei Darussalam's economy over that period.
Among the reasons cited by Ariffin Hj Emran, the general manager of BIACC, for the downturn in cargo movements, especially exports, was the decline in the country's once-vibrant textile sector and the shift by national flag carrier Royal Brunei Airlines (RBA) to using smaller aircraft in 2003 and 2004.
"Since 90% of air cargo is handled by RBA, their refleeting programme definitely had an impact on cargo throughput," Ariffin said in an interview with the Brunei Times on July 8. "In the past, bigger planes like the 767s were used for regional routes but RBA has downscaled its fleet."
This downsizing has reduced RBA's cargo-carrying capacity, with the airline's newer fleet, consisting of six Boeing B767-300s, two Airbus A320s and two A319s, having less space for freight, he said.
While RBA's own cargo-carrying capacity may have been reduced in recent years, a new firm has stepped in to fill at least part of the gap. In mid-June, Syabas Aviation, a newly formed local company, began cargo services out of BIA, flying twice a week to Singapore using two leased Antonov freight haulers.
Sheikh Abas bin Sheikh Mohamed, Syabas' chairman, believes that the airline can tap into a growing niche market, saying there is an increasing demand for quick movement of special cargos.
"Petroleum exploration, for instance, requires logistical products such as drilling parts," he told local media on June 12. "Certain work at the oilfield needs to be speeded up and faster delivery is required."
Though stressing that Syabas was not competing with the existing air cargo flights, merely complementing existing services, Sheikh Abas said that for the first time in 30 years, Brunei Darussalam now had a dedicated air forwarding service.
As is the case with maritime cargo services, Brunei Darussalam will always face stiff competition across the region as it seeks to gain a greater slice of the airfreight market. Both Thailand and Malaysia have embarked on projects to expand the freight-handling capacities of some of their major airports, while Singapore's Changi Airport has a total airfreight capacity of around 4m tonnes.
With improvements and upgrades in the works, BIA's cargo-handling capacity is expected to boost the local economy and allow the airport to service the freight needs not only of the Sultanate itself but also of the nearby Malaysian states of Sabah and Sarawak, and further across the BIMP-EAGA.
Wednesday, June 24, 2009
Sailor on Brunei flagship
From the Lakeland Echo of United Kingdom, we get this news on 23rd June 2009:-
+++++
A BARROW IN FURNESS sailor is playing a vital role as part of a Royal Navy task group leading a major multi-national land and maritime exercise in and around Brunei, known as Exercise Commando Rajah.
It is the first time in more than a decade that such a series of exercises has taken place between the Royal Navy and Brunei's military and it forms part of the navy's task group deployment known as Operation Taurus. Logistician Carla Macaulay, 24, is an administration and pay expert onboard HMS Bulwark, the flagship for the deployment.
HMS Bulwark, an amphibious assault ship, is leading the task group of helicopter landing platform HMS Ocean, Type 23 frigate HMS Somerset, multi-role survey ship HMS Echo with embarked divers from the Fleet Diving Group and the Royal Fleet Auxiliary tanker RFA Wave Ruler.
Speaking as the task group arrived in Brunei, Charlotte, a former pupil of St Bernard's RC High School, said: "This exercise will give us all really important training in amphibious warfare, essentially that's moving our landing forces ashore from our ships and then pushing them further into the jungles of Brunei where we will continue to command and support them from the sea.
"It's important for the sailors to maintain this capability as we never know when we'll be called upon to use it for real.
"It's key for our Royal Marines because they've become much more used to operating in very different conditions such as those in Iraq and Afghanistan. So again, it's vital for them to gain and maintain those sorts of skills.
"This is a great phase of the deployment for us all as the Royal Navy doesn't come to this part of the world very often."
+++++
+++++
A BARROW IN FURNESS sailor is playing a vital role as part of a Royal Navy task group leading a major multi-national land and maritime exercise in and around Brunei, known as Exercise Commando Rajah.
It is the first time in more than a decade that such a series of exercises has taken place between the Royal Navy and Brunei's military and it forms part of the navy's task group deployment known as Operation Taurus. Logistician Carla Macaulay, 24, is an administration and pay expert onboard HMS Bulwark, the flagship for the deployment.
HMS Bulwark, an amphibious assault ship, is leading the task group of helicopter landing platform HMS Ocean, Type 23 frigate HMS Somerset, multi-role survey ship HMS Echo with embarked divers from the Fleet Diving Group and the Royal Fleet Auxiliary tanker RFA Wave Ruler.
Speaking as the task group arrived in Brunei, Charlotte, a former pupil of St Bernard's RC High School, said: "This exercise will give us all really important training in amphibious warfare, essentially that's moving our landing forces ashore from our ships and then pushing them further into the jungles of Brunei where we will continue to command and support them from the sea.
"It's important for the sailors to maintain this capability as we never know when we'll be called upon to use it for real.
"It's key for our Royal Marines because they've become much more used to operating in very different conditions such as those in Iraq and Afghanistan. So again, it's vital for them to gain and maintain those sorts of skills.
"This is a great phase of the deployment for us all as the Royal Navy doesn't come to this part of the world very often."
+++++
Saturday, May 23, 2009
Relative Calm in Brunei Darussalam
The Oxford Business Group reported on 22nd May 2009 as follows:
+++++
Brunei Darussalam: Relative Calm
Brunei's real estate sector appears to be little affected by the global recession, with transaction levels remaining stable and prices relatively flat, though it is unlikely the property market will experience strong growth in the short term due to a number of issues limiting investment activity.
According to Lim Poh Yeh, the general manager of White Castle Real Estate and Development, demand for residential property continues to be high, though this can depend on the location of the home offered for sale.
"It depends on the budget of the family or individual, but the demand for housing in Brunei is there, it's just a matter of what is available in the market," Lim said in an interview with local press at the end of March.
A large part of that demand comes from the lower-income segment of the community, those eligible for state housing support and who are unable to buy on the open market. Latest figures put the waiting list for subsidised housing at around 17,000, though this will be cut under a new programme announced in late February by the Brunei Economic Development Board.
As part of the state's National Housing Scheme, 2000 new houses will be built on a 180-ha greenfield site at Kampung Pandan in Kuala Belait, with the project to be completed within two years.
Though the market as a whole has not been negatively affected by the international economic crisis, there remains an oversupply of stock in some segments, especially in mid-range retail properties and the high-end residential segment. With fewer expatriate workers coming to Brunei, the call for more luxurious accommodation has dropped off somewhat, while more recently constructed commercial and residential properties built during the oil price boom - a time when the costs of construction materials were at a premium - are struggling to find takers willing to pay a price that will cover the building cost.
There are also a number of factors that are holding back the real estate sector's rate of growth according to local experts, with one of the main issues being the restrictions on foreign investment and ownership.
Though Brunei has approved legislation allowing foreigners to buy property within the Sultanate, it has not as yet come into force. This may soon change, with Begawan Mudim Dato Paduka Hj Bakar, the minister of development, telling the Legislative Council in mid-March that, while complexities of one of its regulations have delayed its implementation, it was hoped the legislation would be enacted in the very near future.
If so, this could stimulate the local property market, as well as encourage overseas investment in residential and commercial developments.
The shortage of land for development is also a limiting factor for the sector, with less than 10% of land privately owned, mostly along Brunei's coastal strip, with a further 8% held under temporary occupation licences. A further 35% of Brunei's territory has been declared as virgin forest, and is strictly protected from development, while the remaining land is in state hands.
The lack of prime development sites and the slow pace at which freehold land is made available does impact on the sector, said Lim.
"Sometimes we have to wait for a very long time for the landowners to decide whether they want to sell their land or not," he said.
Some in the industry are also concerned that a newly instituted property tax may take some of the heat out of property sector, with local media citing real estate professionals as saying the new tax will slow down market growth and discourage prospective investors and businesses.
Announced in December last year and implemented as of April 1, the tax levies a 12% charge on the annual rental fees of commercial and residential properties in the greater Bandar Seri Begawan area, while buildings used by their owners for commercial or residential purposes are assessed at a standard rate of $3.60 per sq metre.
However, while there was a general consensus that commercial sales and rentals may be affected, the demand for residential properties would help sustain the market.
If, as expected, the property market in Brunei remains stable throughout the global financial crisis, it would have a sound platform to build on when the local and regional economies return to higher rates of growth. This platform will be further strengthened if more land is made available for private development and restrictions on foreign ownership are eased.
+++++
+++++
Brunei Darussalam: Relative Calm
Brunei's real estate sector appears to be little affected by the global recession, with transaction levels remaining stable and prices relatively flat, though it is unlikely the property market will experience strong growth in the short term due to a number of issues limiting investment activity.
According to Lim Poh Yeh, the general manager of White Castle Real Estate and Development, demand for residential property continues to be high, though this can depend on the location of the home offered for sale.
"It depends on the budget of the family or individual, but the demand for housing in Brunei is there, it's just a matter of what is available in the market," Lim said in an interview with local press at the end of March.
A large part of that demand comes from the lower-income segment of the community, those eligible for state housing support and who are unable to buy on the open market. Latest figures put the waiting list for subsidised housing at around 17,000, though this will be cut under a new programme announced in late February by the Brunei Economic Development Board.
As part of the state's National Housing Scheme, 2000 new houses will be built on a 180-ha greenfield site at Kampung Pandan in Kuala Belait, with the project to be completed within two years.
Though the market as a whole has not been negatively affected by the international economic crisis, there remains an oversupply of stock in some segments, especially in mid-range retail properties and the high-end residential segment. With fewer expatriate workers coming to Brunei, the call for more luxurious accommodation has dropped off somewhat, while more recently constructed commercial and residential properties built during the oil price boom - a time when the costs of construction materials were at a premium - are struggling to find takers willing to pay a price that will cover the building cost.
There are also a number of factors that are holding back the real estate sector's rate of growth according to local experts, with one of the main issues being the restrictions on foreign investment and ownership.
Though Brunei has approved legislation allowing foreigners to buy property within the Sultanate, it has not as yet come into force. This may soon change, with Begawan Mudim Dato Paduka Hj Bakar, the minister of development, telling the Legislative Council in mid-March that, while complexities of one of its regulations have delayed its implementation, it was hoped the legislation would be enacted in the very near future.
If so, this could stimulate the local property market, as well as encourage overseas investment in residential and commercial developments.
The shortage of land for development is also a limiting factor for the sector, with less than 10% of land privately owned, mostly along Brunei's coastal strip, with a further 8% held under temporary occupation licences. A further 35% of Brunei's territory has been declared as virgin forest, and is strictly protected from development, while the remaining land is in state hands.
The lack of prime development sites and the slow pace at which freehold land is made available does impact on the sector, said Lim.
"Sometimes we have to wait for a very long time for the landowners to decide whether they want to sell their land or not," he said.
Some in the industry are also concerned that a newly instituted property tax may take some of the heat out of property sector, with local media citing real estate professionals as saying the new tax will slow down market growth and discourage prospective investors and businesses.
Announced in December last year and implemented as of April 1, the tax levies a 12% charge on the annual rental fees of commercial and residential properties in the greater Bandar Seri Begawan area, while buildings used by their owners for commercial or residential purposes are assessed at a standard rate of $3.60 per sq metre.
However, while there was a general consensus that commercial sales and rentals may be affected, the demand for residential properties would help sustain the market.
If, as expected, the property market in Brunei remains stable throughout the global financial crisis, it would have a sound platform to build on when the local and regional economies return to higher rates of growth. This platform will be further strengthened if more land is made available for private development and restrictions on foreign ownership are eased.
+++++
Saturday, April 18, 2009
Fuelling the Brunei Economy
The Oxford Business Group issued the following report on 17 April 2009:
+++++
Brunei: Fuelling the Economy
Brunei is looking to maximise its hydrocarbon reserves in order to extend the working life of its energy sector, while at the same time expanding the country's industrial base to make best use out of its oil and gas fields.
The energy sector is the bedrock on which Brunei's economy is built, representing around 90% of exports and more than 50% of GDP. However, within a generation the economic balance is expected to change. Brunei's identified oil reserves, estimated to be around 1.3bn barrels, could be exhausted within 25 years at present rates of production, while the Sultanate's gas reserves of 335bn cu metres mean existing fields have a production life of 40 years.
This reliance on energy, especially on oil exports, for revenue means that Brunei's economy is exposed to price fluctuations on the international market. Though Brunei cut back production in the past two years to below 200,000 barrels per day (bpd), it easily made up any shortfall due to skyrocketing prices. Now, with the rate for crude having dropped to below $50 a barrel from its peak of $147 in July last year, earnings are expected to be down in 2009.
At the beginning of April, the Asian Development Bank (ADB) predicted Brunei's GDP would shrink by 0.4%, following on from an estimated contraction of 2.7% in 2008.
Though predicting the economy would rebound in 2010, expanding by 2.3%, the ADB warned this was contingent on Brunei's energy production declining by no more than 1% this year and the next.
"The main domestic risk to the growth forecasts is the performance of the oil and gas sector, as well as the level of progress in the Rancangan Kemajuan Negara 2007-12 - the national development plan," the report said.
Even though its reserves are dwindling, Brunei is still looking to develop its downstream energy sector to obtain added value from its natural resources. These include a proposal to build an aluminum smelter to be powered by local natural gas and a large oil refinery, planned as a joint venture between the private sectors of Brunei and Kuwait, and which would use Kuwaiti oil for feedstock.
One project that has long since got off the drawing board and is nearing completion is a $400m methanol processing plant at Sungai Liang that is scheduled to be fully operational in April 2010. The facility, a joint venture between the Brunei National Petroleum Company, which holds a 50% stake in the project, and Japanese firms Mitsubishi Gas Chemical and the Itochu Corporation, will produce 850,000 tonnes of methanol annually, with Petroleum Brunei committed to supplying 14bn cu metres of gas to the plant over a 22-year period.
While this represents a fraction of Brunei's total gas reserves, there have been warnings that while seeking to maximise the returns on its energy wealth projects should be carefully considered, least they drain away a disproportionate amount of reserves.
A recently published study assessing the methanol project, written by finance expert Jefri Salleh, said that the development could have the effect of optimising possible export return from natural gas. However, he also warned enthusiasm for similar projects should be tempered with caution.
"This is not to say, however, that the country's natural gas reserves should be made readily available for more projects like this one, given the risk of accelerating depletion of the country's natural gas reserves," Jefri said.
The energy sector received a boost in mid-March when long-running negotiations between the governments of Brunei and Malaysia finally resolved a dispute over offshore territorial demarcation. This will now allow for exploration of new undersea blocks with potentially rich oil deposits.
The dispute, which had been the subject of talks for more than six years, centred on delineating maritime territorial boundaries. Both Brunei and Malaysia had awarded exploration and production rights to overseas firms in 2003 in the same area off the coast of the island of Borneo.
The two countries have agreed to collaborate in the exploration and exploitation of the contested blocks, though no timeframe has yet been set for work in the region to begin. While there are no guarantees in oil exploration, a 440m-barrel field had been identified at a nearby block in 2002.
Similar successes in the new fields could help extend the life of Brunei's oil industry and see the energy sector continue its role as the mainstay of the country's economy into the middle of this century and possibly beyond.
+++++
+++++
Brunei: Fuelling the Economy
Brunei is looking to maximise its hydrocarbon reserves in order to extend the working life of its energy sector, while at the same time expanding the country's industrial base to make best use out of its oil and gas fields.
The energy sector is the bedrock on which Brunei's economy is built, representing around 90% of exports and more than 50% of GDP. However, within a generation the economic balance is expected to change. Brunei's identified oil reserves, estimated to be around 1.3bn barrels, could be exhausted within 25 years at present rates of production, while the Sultanate's gas reserves of 335bn cu metres mean existing fields have a production life of 40 years.
This reliance on energy, especially on oil exports, for revenue means that Brunei's economy is exposed to price fluctuations on the international market. Though Brunei cut back production in the past two years to below 200,000 barrels per day (bpd), it easily made up any shortfall due to skyrocketing prices. Now, with the rate for crude having dropped to below $50 a barrel from its peak of $147 in July last year, earnings are expected to be down in 2009.
At the beginning of April, the Asian Development Bank (ADB) predicted Brunei's GDP would shrink by 0.4%, following on from an estimated contraction of 2.7% in 2008.
Though predicting the economy would rebound in 2010, expanding by 2.3%, the ADB warned this was contingent on Brunei's energy production declining by no more than 1% this year and the next.
"The main domestic risk to the growth forecasts is the performance of the oil and gas sector, as well as the level of progress in the Rancangan Kemajuan Negara 2007-12 - the national development plan," the report said.
Even though its reserves are dwindling, Brunei is still looking to develop its downstream energy sector to obtain added value from its natural resources. These include a proposal to build an aluminum smelter to be powered by local natural gas and a large oil refinery, planned as a joint venture between the private sectors of Brunei and Kuwait, and which would use Kuwaiti oil for feedstock.
One project that has long since got off the drawing board and is nearing completion is a $400m methanol processing plant at Sungai Liang that is scheduled to be fully operational in April 2010. The facility, a joint venture between the Brunei National Petroleum Company, which holds a 50% stake in the project, and Japanese firms Mitsubishi Gas Chemical and the Itochu Corporation, will produce 850,000 tonnes of methanol annually, with Petroleum Brunei committed to supplying 14bn cu metres of gas to the plant over a 22-year period.
While this represents a fraction of Brunei's total gas reserves, there have been warnings that while seeking to maximise the returns on its energy wealth projects should be carefully considered, least they drain away a disproportionate amount of reserves.
A recently published study assessing the methanol project, written by finance expert Jefri Salleh, said that the development could have the effect of optimising possible export return from natural gas. However, he also warned enthusiasm for similar projects should be tempered with caution.
"This is not to say, however, that the country's natural gas reserves should be made readily available for more projects like this one, given the risk of accelerating depletion of the country's natural gas reserves," Jefri said.
The energy sector received a boost in mid-March when long-running negotiations between the governments of Brunei and Malaysia finally resolved a dispute over offshore territorial demarcation. This will now allow for exploration of new undersea blocks with potentially rich oil deposits.
The dispute, which had been the subject of talks for more than six years, centred on delineating maritime territorial boundaries. Both Brunei and Malaysia had awarded exploration and production rights to overseas firms in 2003 in the same area off the coast of the island of Borneo.
The two countries have agreed to collaborate in the exploration and exploitation of the contested blocks, though no timeframe has yet been set for work in the region to begin. While there are no guarantees in oil exploration, a 440m-barrel field had been identified at a nearby block in 2002.
Similar successes in the new fields could help extend the life of Brunei's oil industry and see the energy sector continue its role as the mainstay of the country's economy into the middle of this century and possibly beyond.
+++++
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