Interview: Dato Matsatejo Sokiaw
Brunei Darussalam is aiming to double oil and gas production by 2030. What opportunities can foreign energy players and local service companies look forward to in the medium term?
DATO MATSATEJO SOKIAW: Doubling production will attract significant investment in both exploration and production development. We have started exploration in new commercial areas and this will continue for a few years. It may take at least another five years from exploration success to production. So in the medium term, we expect an incremental investment of a few hundred million dollars per year, primarily for exploration. Thereafter, exploration and development costs will grow by around $4bn per year, in 15-20 years’ time. Similarly, we will see significant investment in the downstream.
These new activities will require a range of supporting services, such as engineering design, material procurement, construction and installation, drilling, vessel operation, production system operation and maintenance, logistics, catering, training, finance, etc. The industry may also need an additional 10,000-15,000 people to meet manpower requirements for these activities, so there are tremendous opportunities. We want to see the utmost involvement from local companies, institutions and job seekers to maximise the economic spin-offs from these opportunities. The good news is that we do not have to start from scratch as Brunei Darussalam has built a strong foundation with many good local firms and an educated population that can cater to the industry. However, it is not enough. The two indicators that measure local involvement – business content and employment – are still low, at less than 15% and 40%, respectively. I am therefore pleased with the government’s plan to create a more conducive environment to spur growth in these two areas by providing physical facilities and an economic and legal framework to incentivise local companies, as well as ensuring a competent workforce for the industry. We are also actively looking at how the businesses which face high entry barriers – such as requirements for big capital investments, high technology, higher management capability or a combination of these – can be set up in Brunei Darussalam. I am optimistic that we are heading in the right direction, and we have already seen positive results.
What are the prospects for entering foreign markets? Where do you see the best opportunities?
DATO MATSATEJO: We have the benefit of observing how other national oil companies in the region have evolved and become so successful. The patterns in all examples are very similar in that there is full mandate and support given from its shareholder (the government) to operate as a commercial entity, and a full commitment is made to build capabilities from day one. PetroleumBRUNEI also has both of these. I will be the first to admit that we have a very challenging time ahead of us. We will be competing with established international players, but we must benchmark ourselves with the best in the world in every sense. It will take time to establish ourselves in foreign markets and we just started this process in 2012. Upstream, it may take 10 years from block acquisition to commercial production. Farmin of producing fields would see immediate results but would involve a very complex transaction. Downstream, commercial development might take four to six years. In services, it will be slightly quicker.
There are still a great many opportunities out there.
In the medium term, it will be necessary to supplement our capabilities by forming strategic alliances with established players for both oil operators and service providers. We are currently laying the foundations for the future and there is no better time than now to start this process. I hope that in 20 years’ time we will see significant production coming from our overseas ventures, which will help supplement the income from our domestic production.
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