Brunei Darussalam: Regional energy cooperation in spotlight

A drive is gathering pace in Brunei Darussalam to increase regional cooperation on energy provision as part of a broader bid by Asia’s oil producers to meet rising demand from nearby fast-growing economies.

Brunei Darussalam is one of only three countries in “developing Asia”, alongside Kazakhstan and Azerbaijan, forecast still to be energy-self-sufficient in 2035, according to a report published in April by the Asian Development Bank (ADB). The ADB analysis was based on a country’s projected primary energy mix until 2035, taking into account key factors such as the amount of coal needed to generate electricity, current indigenous reserves of fossil fuel and projected consumption in the interim years.

While other oil exporters across the region are already turning to imports for growth, Brunei Darussalam is channelling its efforts into collaborative ventures, which could allow the Sultanate to capitalise on its experience and expertise. Minsoo Lee, the senior economist in ADB’s macroeconomics and finance research team who compiled the bank’s study, acknowledged that while Brunei Darussalam looked set to remain self sufficient in the coming years, the Sultanate might not necessarily be able to rely on energy as a source of wealth.

“Yes, Brunei will be energy self-sufficient with two other countries in Asia by 2035. We don’t have an accurate estimate whether it would still be an exporter by 2035,” he said in response to a question from the Brunei Times.

The government’s revenues in 2012 continued to be dominated by the hydrocarbons sector, accounting for 86.3% of earnings. The bulk of Brunei Darussalam’s oil exports are channelled to countries in Asia.

Lee highlighted the growing importance of joint exploration in meeting Asia’s energy challenges, saying regional cooperation and integration looked likely to be key drivers of expansion.

An editorial published by the Brunei Times in February suggested the Sultanate, alongside other countries with energy expertise, could spearhead efforts to meet rising demand for energy across the region. “Brunei, as the new ASEAN Chairman, could use its experience and leadership to help address the need for ASEAN countries to improve....energy efficiency in order to use valuable resources wisely,” it said.

Brunei Darussalam has upped its efforts to increase regional energy cooperation in recent months, arranging for delegations to meet with Laotian, Vietnamese, Chinese and Japanese leaders and representatives.

In March, Laos’ vice-minister for foreign affairs, Bounkeut Songsamsak, told the Brunei Times that the Sultanate could provide his country with crude oil to support its plans to build an oil refinery. He added that officials from Brunei Darussalam were considering constructing a modern hydroelectric power plant in northern Laos which would become “a model for renewable energy”.

Just one month earlier, officials from Brunei Darussalam visited Hanoi to sign key oil and gas deals. Brunei Shell Petroleum Company, meanwhile, renewed a crude oil contract with the Singaporean arm of PetroVietnam Oil Corporation last November.

In recent months, energy cooperation deals have also been proposed with East Asian giants Japan and China. Japan already receives 90% of Brunei Darussalam’s liquefied natural gas exports, while Beijing agreed to establish a China-Brunei Strategic Cooperative Relationship in April, paving the way for cooperation in the fields of energy, infrastructure, agriculture, fisheries, health and tourism.

At present, Brunei Darussalam, Indonesia and Malaysia are South-east Asia’s only net energy exporters. Large populations and rising energy demands have prompted experts to suggest that Indonesia and Malaysia might need to begin importing hydrocarbons before 2020, although both countries are also shifting the focus to energy cooperation. Malaysia is already receiving natural gas through Indonesian pipelines and has embarked on a joint development initiative for oil and gas with Thailand.

According to the International Energy Agency, Thailand has significant volumes of known coal and gas reserves, although these are expected to be depleted by 2035. Its share of renewables is forecast to remain constant at about 20%. In the Philippines, the contribution made by renewables looks set to shrink from 43% in 2010 to 14% by 2035. Proven indigenous gas and coal reserves are expected to have run out by this time.

Taking the lead in regional energy export and cooperation could boost Brunei Darussalam’s economy, while helping the South-east Asian region maintain its position as an engine of global growth. The Sultanate is well placed to play a greater role in ASEAN’s plans for developing the sector, which include building gas pipelines to better connect member states, rolling out power grids across borders and laying a trans-ASEAN gas pipeline.

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