The Southeast Asian nation of Brunei has a small but prosperous economy. The country's industrial sector accounts for 63.1% of the national GDP, and the economy is heavily dependent on the export of crude oil and natural gas. Brunei is Southeast Asia’s third largest producer of oil and the world’s ninth biggest liquefied natural gas producer. Brunei’s oil production reached a peak in 1979, achieving a production rate of 240,000 barrels per day, but current output is about 200,000 barrels per day. The fall in production is a result of a deliberate attempt to save oil reserves for the future.
The major industries in Brunei are listed below.
Oil and Gas Industry
Brunei's oil and gas industry is dominated by the Brunei Shell Petroleum (BSP), which is owned equally by the government and the Royal Dutch Shell plc. BSP also owns the country's only refinery. With a production capacity of 10,000 barrels per day, the refinery produces sufficient oil to cater to the domestic oil demands in Brunei. BSP and four other sister companies employ the second highest number of people in the country, after the government.
Other companies like Elf Aquitaine (France), UNOCAL (USA), and Fletcher Challenge (New Zealand) are also active in the field of oil exploration in Brunei. Some promising discoveries have been made in the region and the government now plans to encourage deep water exploration for oil and natural gas resources.
The main oil export partners of Brunei are the member states of the Association of Southeast Asian Nations (ASEAN), South Korea, the United States, and Taiwan. Although oil exports to Japan accounted for 45% of total oil exports in 1982, the value dropped to only 19% in 1998. This drop was offset by a rise in the percentage share of oil exports to South Korea from, which increase from 8% to 29% within the same time frame.
The natural gas industry of Brunei is dominated by Brunei LNG (BLNG) plant, which was founded in 1972 and is now one of the biggest liquefied natural gas (LNG) plants in the world. The plant is responsible for liquefying nearly all of the country’s natural gas. Brunei ranks fourth in LNG exports in the Asia-Pacific region. Nearly 82% of the country’s LNG exports go to Japan, on the basis of a long-term agreement between the two countries. South Korea is also an important market for the LNG produced in Brunei.
The petrochemical industry is also another important industry in Brunei. The country has established a large petrochemical hub, the SPARK, in Liang. There are plans to develop SPARK into a world-class petrochemical hub, and the Brunei Methanol Company has started a Methanol plant in SPARK with an investment of $450 million USD. The plant was designed for a production capacity of 850,000 tons of methanol annually. The Sultan of Brunei, Hassanal Bolkiah, inaugurated the methanol plant in 2010.
Other Industries in Brunei
Since Brunei’s current economy is highly reliant on oil and natural gas resources, both of which are non-renewable, the economy is highly susceptible to global oil price drops. Thus, the government is attempting to diversify the economy. However, little success has been achieved to date. The non-petroleum based industries in Brunei include banking, fishing, forestry, construction, and agriculture.
Recent Developments in Brunei's Economy
In the last couple of years, Brunei’s economy has experienced an economic recession. Falling oil prices and low production due to repair work of the country’s important oil wells are responsible for this recession.
In 2009, the country launched Brunei Halal, a national halal branding scheme aimed at attracting Muslim consumers from both Brunei and abroad to products carrying the Brunei Halal trademark. Under the scheme, manufacturers are given permission to use the premium trademark in their products. The trademark signifies the manufacturer’s compliance with Islamic teachings in the production process.