The Brunei’s Petroleum Industry Redesign

The Sultanate of Negara Brunei Darussalam located north east of Borneo is an oil and gas rich state which is fast running out of its reserves. Its daily production averages about 180,000 barrels per day and is the ninth largest producer of LNG in the world.

Brunei Shell Petroleum, a joint venture between the Bruneian government and Dutch energy giant Shell, dominates in the production and refining of crude oil, producing 10,000 barrels per day which is enough for domestic consumption. The state owned Petroleum Brunei regulates, as well as deploys investments and operates JV agreements with partners aimed at the growth and development of its oil and gas industry.

Considering the dwindling reserves of Brunei’s hydrocarbon assets, Petroleum Brunei should take a cue from Saudi Arabia whose national oil company Saudi Aramco is redesigning its crude oil refining chain by investing billions of dollars in strategic consumer markets such as India, which is the world’s fastest growing economy and third largest consumer of crude oil in the world after the United States and China with more than 4 million barrels per day, by purchasing a 20 percent equity in Reliance Industries refining division which values the business at $75 billion. Reliance Industries Jamnagar refinery is the biggest in the world, producing 1,240,000 barrels per day and earns over $50 billion in annual revenues. Since India’s energy policy restricts crude oil imports, this collaboration with Saudi Aramco will protect its domestic consumption.

In Nigeria, its largest conglomerate, Dangote Group, is currently developing the world’s largest single train refinery, estimated at $12 billion, and expected to soon come on stream, and hit full capacity by mid-2020 to refine 650,000 barrels per day, petrochemical plant to produce 780 KTPA of polypropylene and 500 KTPA of polyethylene as well as 3.0 million tonnes of urea from its fertilizer plant. As Africa’s largest market with 200 million citizens and current local consumption fed by imports, investment by Petroleum Brunei in Dangote Petroleum Refinery will position it as a stakeholder in a key crude oil consumption market.

Bruneian upstream petroleum operators should leverage predictive and data driven maintenance for production and cost efficiency which will help to reduce Mean Time To Repair(MTTR) and increase Mean Time Before Failure. Through smart drilling technologies like robotics and deployment of sensors they will gain predictive analytics, guarantee early identification of drilling challenges, hazards to well control problems, develop more enhanced oil recovery techniques, and generate real time data through logging while drilling and measurement while drilling. With artificial intelligence, rock and fluid properties can be identified and new oil and gas fields discovered to boost its reserves.

Petroleum Brunei should utilize blockchain technology in the conduct of its daily operations. As a secured transaction ledger database which is shared by all parties in a distributed network which records and stores every transaction that occurs in the network, Petroleum Brunei should utilize blockchain to store information on its laws, investment guidelines, Joint Ventures like Brunei Methanol Company and track their operations in real time. Brunei Shell Petroleum should acquire drones and implement blockchain for efficient monitoring of daily crude oil production and its refinery which delivers 10,000 barrels per day for domestic consumption. 

Also the renegotiation of its Production Sharing Contracts as well as automation of the sale of crude oil and gas will be transparent with the adoption of Smart Contracts which is an automated contract that will be issued by the corporation to buyers that will execute various terms and based on reaching agreed upon conditions. This will eliminate fraud since no middleman will be involved in the transaction. In the event of a force majeure, the system will autonomously inform the buyer that the terms of contract cannot be delivered at that time due to reasons beyond the seller’s control.