1. INDUSTRY DEVELOPMENT IN
GAS
INDUSTRY DEVELOPMENT IN
BRUNEI DARUSSALAM
Good morning to everyone.
I would like to say thank you for giving me an opportunity to present to you all today on the gas industry development in Brunei Darussalam. I hope my presentation today will give you knowledge and information on the latest development of gas industry in Brunei.
First let me present to you the outline of my presentation today.
Petroleum Unit Global LNG Summit –18 December 2003
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2. GAS INDUSTRY DEVELOPMENT IN BRUNEI DARUSSALAM
PRESENTATION OUTLINE
GAS INDUSTRY DEVELOPMENT IN BRUNEI DARUSSALAM
BRUNEI DARUSSALAM – ABODE OF PEACE
OIL & GAS INDUSTRY CONTRIBUTIONS
KEY PLAYERS IN GAS INDUSTRY
KEY MILESTONES OF GAS INDUSTRY
NATURAL GAS PRODUCTION
NATURAL GAS DEMAND
BRUNEI LNG
GAS INDUSTRY ASPIRATION
OFFERED ACRAEGE
First I would like to introduce to you a brief note on Brunei Darussalam.
Then, I’ll present the oil & gas contribution to Brunei, the key players in Brunei gas industry.
Petroleum Unit Global LNG Summit –18 December 2003
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3. BRUNEI DARUSSALAM – ABODE OF PEACE
Politically & Economically Stable.
Well-positioned and has proximity to existing & potential Asia-Pacific markets.
More than 70 years experience in upstream E&P activities.
More than 30 years in LNG Business.
BRUNEI
DARUSSALAM
Brunei Darussalam is located on the northwest corner of Borneo island in the South China Sea. It is about 442 km north of equator. Brunei is described by many as an äbode of peace
With a total land area of 5,765 sq km, the country is divided into four districts, namely Brunei Muara, Belait, Tutong and Temburong. Its capital is Bandar Seri Begawan, which is within the Brunei Muara district.
Brunei is politically and economically stable country. It is well-positioned and has proximity to existing & potential Asia-Pacific gas markets especially in North East and East Asia e.g Japan, Korea, Taiwan, China and the Philippines.
It is more than 70 years experience in upstream E&P activities, and more than 30 years in LNG business. The oil and gas industry is concentrated in the Belait district.
Petroleum Unit Global LNG Summit –18 December 2003
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4. OIL & GAS INDUSTRY CONTRIBUTIONS
Country revenue
Direct employment of 3,500 staffs.
Indirect employment of large part of workforce.
Local business development.
Technology development.
Promotion of technical and HSEQ Standards.
Promotion of Bruneian interest.
Brunei Darussalam’s economy was highly dependent on oil and gas industry until the early 1990’s when the government’s diversification efforts beginning to well-establish. The contribution of oil and gas to Gross domestic Product (GDP) declined from a high of 90.3% to current levels of 38 – 40%.
Nevertheless, oil and gas industry has contributed revenue to the government through the tax, royalty and dividends. Contributions from oil and gas industry to the overall national income experienced a sharp drop from 80% to 35% in The drop is attributed to a reduction on the reliance on oil and gas through economic diversification.
Oil and gas industry gives direct employment of 3,500 staffs and indirect employment.
It promotes local business development in the country. The local business development is supported by the development of oil and gas industry in Brunei.
The development of oil and gas industry in the country has provides to the development of technology.
Oil and gas industry promotes the technical and HSEQ Standards in the country. For example Brunei LNG was awarded ISO The 1st LNG plant in the world receive this ISO. Brunei LNG is also awarded ISO 17025, the 1st LNG laboratory dully certifed.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 4

5. KEY PLAYERS IN BRUNEI GAS INDUSTRY
§ Brunei Shell Petroleum (BSP)
§ Block B Joint Venture (BBJV)
§ Brunei LNG (BLNG)
§ Brunei Shell Tankers (BST)
§ Brunei Gas Carrier (BGC)
Let me introduce to you the key players in Brunei Darussalam’s gas industry.
Firstly, Brunei Shell Petroleum. It operates the intricate network of offshore fields, where gas is produced. BSP is owned half by HM’s government and half by the Asiatic Petroleum Company Limited, a company in the Royal Dutch/Shell Group.
Secondly, Block B Joint Venture or BBJV. It started producing gas in 1999 and become second gas producer in Brunei.The gas field is operated by the totalFinaelf.
Then Brunei LNG. It owns a plant in Lumut where gas is treated and liquefied for sale mainly to Japan and Korea. It is owned 50% by the HM’s government and with 25% of the shares held each by the Shell Petroleum N.V., a company in the Royal Dutch/Shell Group, and Mitsubishi Corporation of Japan.
Brunei Shell Tankers, who owns 7 LNG carriers with each tank capacity of about 75,000 m3. It is 50% owned by the HM’s government and 25% of the shares owned each by the Shell Petroleum N.V, a company in the royal Dutch/Shell Group, and Mitsubishi Corporation of Japan.
Brunei Gas Carrier or BGC. It owns one LNG carrier with tank capacity of about 135,000 m3. It is 80% owned by the HM’s government and 10% each by the Shell Gas B.V and Diamond gas Carriers B.V.
The Brunei Shell Tankers and Brunei Gas Carrier LNG vessels are chartered by the Brunei LNG for delivering LNG to their Buyers.
Petroleum Unit Global LNG Summit –18 December 2003
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6. PRESENT DAY BRUNEI HC INFRASTRUCTURE Crude Oil or Condensate pipeline
Maharaja Lela
Gannet
Fairley
Magpie
Champion
Muara Port
Ampa Fairley Rationalization Project
Iron Duke
Amp
BANDAR SERI BEGAWAN
Gadong
Berakas
Jerudong
Tali
Crude Oil or Condensate pipeline
OPP
BLNG
Natural Gas pipeline
Terminal
( SCOT )
Lumut
Seria
CPP
Offshore facilities
Brunei Shell Petroleum was the only oil and gas producer until 1999 when Maharaja Lela field was discovered by the TotalFinaElf.
The vast proportion of Brunei’s oil and gas reserves are offshore. The major producing fields are Southwest Ampa and Champion production that came on stream in 1964 and 1972 respectively.
Onshore production is from two main fields, namely Seria and Rasau. Seria field was the first commercial discovery made in the country as early as 1929.
Gas is supplied to the BLNG plant near Lumut from Maharaja Lela field via an onshore processing plant and directly from Brunei Shell Petroleum operated gas fields.
Gas is also supply to the power generations. Power generations are located at four diferent locations, namely Gadong, Berakas, Jerudong and Lumut. The total installed capacity is 0.4 gigawatts.
Crude oil is piped directly to the Seria crude oil terminal and them transferred to the refinery.
Lumut
Rasau
Refinery
10,000 bpd
Onshore facilities
Power facilities
Petroleum Unit Global LNG Summit –18 December 2003
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7. EXISTING CONCESSIONS Offshore Concessions 8,618 sq km
- Block A & CD (Shell Deepwater Borneo Ltd., NewCo)
Block B (TotalFinaElf, Shell Deepwater Borneo ltd., NewCo)
Others (BSP)
• Land concession 2,624 sq km
- BSP
The current offshore and offshore concessions are held by three majors companies namely:
A joint venture of Shell Deepwater Borneo Ltd. & NewCo.
A joint venture of TotalFinaElf, Shell Deepawater Borneo Ltd., & NewCo.
Brunei Shell Petroleum.
Brunei Shell Petroleum holds 5,627 sq km offshore and all the 2,624 sq km onshore area.
TotalFinaElf, Shell Deepwater Borneo and NewCo joint ventures hold a 1,991 sq km area of offshore acraeage.
These concessions are held under the Petroleum Mining Act’s legal arrangements.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 1

8. NATURAL GAS PRODUCTION
Highest in recorded production history
1999 – Block B Joint Venture start
producing & become 2nd gas producer
This slides show the historical trend of natural gas production.
Brunei natural gas production has grown steadily over the past thirteen years partially due to the increase in domestic power generation demand and an increasing commitment in the LNG sales. For the year 2002, the total gas production is 32 million m3/day.This is highest production recorded. In the first quarter this year, the average gas production is 36 million m3/day. For the year 2003, the average gas production is expected at million m3/day.
About 15% of the total natural gas production is consumed domestically while the balance is liquefied at Brunei LNG for exports.
Brunei natural gas production stemmed from two key concessions holders. They are:
Brunei Shell Petroleum who produces about 32 million m3/day or 90% of the total Brunei gas production.
About 80% of the gas produced by BSP is delivered to the Brunei LNG for processing into LNG for exports. The remaining gas is utilized for BSP duel own use, for power generation and as town gas for some areas in the country. About 3% was vented/flared.
The Block B Joint Venture, operated by the TotalFinaElf produces about 3 – 4 million m3/day or 10% of the total Brunei natural gas production.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 8

9. KEY MILESTONES OF GAS INDUSTRY IN BRUNEI
1929
Seria Field
1972 – 1st LNG cargo
1980 – 1000th LNG cargo
1987 – 2000th LNG cargo
1993 – 3000th LNG cargo
1999 – 4000th LNG cargo
1969
Brunei LNG Ltd/Cold Gas Trading
1st LNG cargo
1972 e
Brunei Shell Tankers
1986
Japan 1st Contract Extension
1993
Long-term contract with KOGAS r
1997
Brunei Gas Carrier
This slide shows the milestone of gas industry in Brunei Darussalam.
In December 1969, Brunei LNG Limited for LNG production was established.
On the 15 December 1972, the first Brunei LNG cargo was delivered to Senboku No.1 Terminal, Osaka Gas, Japan.
In 1986, a fleet of Brunei Shell Tankers was established. The names of the Brunei LNG carriers now carry the initials of ‘B’ named after the local fishes. Brunei Shell Tankers has 7 LNG vessels.
On 1st April 1993, 20th year of signing of Sale and Purchase Extension Agreement between Brunei LNG and Japanese Buyers.
On the 22nd October 1997, a long-term agreement signed with Korea Gas Corporation for 0.7 million ton of LNG per annum.
The formation of Brunei Gas Carrier in 1998.
On 1st April 1999, the supply of fee gas from Block B Joint Venture, the second gas producer in Brunei, came into effect.
The launching of Abadi, the Brunei Gas Carrier’s first LNG vessel, in July 2002.
This shows the no of LNG cargoes delivered. Since Brunei LNG started its LNG production in 1972, more than 4,000 cargoes were delivered to Buyers.
1998
BBJV
1999
ABADI - 8th LNG Tanker
2002
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 9

10. GAS DEMAND - 2002 Total Gas Demand = 0.4173 TCF
§ LNG – TCF, 85%
§ Power generation – TCF, 9%
§ Petroleum operator own use – TCF, 6%
This slide shows total gas consumption by sectors in the year Three main sectors consumed gas in Brunei are LNG, power generation and operators own use.
The total gas demand in 2002 is about 0.4 TCF, in which about 0.35 TCF or 85% of the total gas production is used for LNG production, 9% for the power generation and 6% by the operators own use.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 10

11. Petroleum operator own use. Downstream industry.
FUTURE GAS DEMAND
LNG.
Power generation.
Petroleum operator own use.
Downstream industry.
LNG plant extension opportunity.
LNG plant (6th train) expansion opportunity.
As you see from the previous slide, at present the gas in Brunei is consumed by three sectors, that is, for LNG production, power generation and petroleum operators own use.
In future, gas is also expected to use as feedstock in the downstream industry, and for LNG plant extension and expansion.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 11

12. Inland Demand Power Generation INLAND GAS DEMAND 2006 – Downstream
projects start
Power Generation
Gas is a major source of fuel in Brunei. Gas demand for power generation has grown steadily in the recent years as a direct result of the development of light and medium industries, completion of new government offices buildings and the government housing resettlement scheme fot its citizens.
Gas demand for power generation is projected to grow from 3.55 million m3/day in 2003 to 5.25 million m3/day in 2005 and 5.95 million m3/day in 2010.
Downstream project is to start in A total of around 2 TCF at around 0.08 TCF per year is currently identified to cater for the various downstream projects.
Meanwhile, the operators own use requirement is projected to grow from 2.43 million m3/day in 2003 to 2.72 million m3/day and 2.51 million m3/day in 2010.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 12

13. EXISTING LNG PLANT – BRUNEI LNG
First production in 1972.
Delivered more than 4,000 B Class Cargoes.
Production capacity 7.2 MTPA
Five trains with each capacity of processing 5.3 million m3/day of gas.
Three storage tanks with total capacity of 176,000 m3.
Long term contract with Japan (6.01 MTPA) and Korea (0.7 MTPA).
Spot sales to Europe and United States.
The Brunei LNG plant is located at Lumut in Belait district. There are approximately 358 BLNG staffs and about 1,000 contractors staffs working at the BLNG plant. Brunei LNG has established itself as a reputable LNG supplier in this Asia-pacific region.
Since it started its operation in 1972, Brunei LNG has delivered more than 4,000 cargoes mostly to Japan but also to Korea, and the rest to Europe and United States.
There are five liquefaction trains. Each train has the capacity of processing 5.3 million m3/day of gas. It capable of producing 7.2 million ton per annum of LNG. This is substantially more than the 6.71 million ton per annum of LNG needed to meet current commitments and there is room to install more trains if required.
It has three storage tanks with total capacity of 176,000 m3. From the storage tanks, the LNG is pumped to LNG vessels along a 4.5 km long jetty. For the B class cargo vessel with capacity of the LNG vessels of about 75,000 m3 of LNG, the loading operation takes approximately 20 hours.
BLNG has two long-term contract with the Japanese and Korean Buyers.The existing long term contract with the Japanese Buyers is the first 20 years extension staring 1993 until Another long-term contract is with KOGAS for the supply of 0.7 million ton per annum of LNG starting 1997 until 2013.
If there is an opportunity, Brunei LNG may export its LNG cargoes to Europe and United states as spot sales.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 13

14. BRUNEI LNG EXPORT
Highest in recorded
export history
KOGAS
1993 – 1st contract extension
This slides shows Brunei LNG export.
Over the last four years there was a continuous growth of LNG deliveries.
The first LNG cargo was exported to Japan in Subsequently, in 1973, a 20 year contract was signed with the Japanese Buyers for 5.14 million tonnes of LNG annually. This contract was expired in It was then renewed for another 20 years from 1993 to 1013 for 5.54 million tonnes of LNG annually. Starting 1998 until 2013 the contractual volume is 6.01 million tonnes of LNG annually.
Brunei also exports LNG to Korea. A long-term contract was signed for the annual supply of 0.7 million tonnes of LNG for a period of 16 years from 1997 – 2013.
Petroleum Unit Global LNG Summit –18 December 2003
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15. BRUNEI LNG - 2002 2001 – Record: first time 200.3 cargoes delivered
2002 – New Record: cargoes delivered
Year 2002 Achievement Deliverable Through:
 More reliable gas supply from gas producers
 Continuous growth of LNG deliveries over the last 4 years
 New outlets: 2 spot cargoes to Spain; 1 spot cargo to U.S.
 No shipping disruptions
For the first time, in 2001, Brunei LNG delivered B class cargoes, an amount equivalent to 6.71 million ton of LNG. These LNG cargoes were delivered to Japan and Korea.
Brunei LNG achieved a new record in 2002 when it delivered LNG cargoes.
The achievement in 2002 is delivered through more reliable gas supply from gas producers, no shipping disruptions and two export destination, namely Spain and United States.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 15

16. BRUNEI LNG – 2003 OUTLOOK
 Absolute top production compares with previous years.
 Stretching gas suppliers; maximum delivery.
 Firm plans for 207+ B Class Cargoes.
For the year 2003, the outlook for Brunei LNG is to get absolute top production compares with previous years.
It needs to stech gas suppliers to provide sufficient gas for a maximum delivery.
Brunei LNG has a firm plans for 207 B class cargoes, an increase of 4 cargoes compares with last year.
Petroleum Unit Global LNG Summit –18 December 2003
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17. BRUNEI GAS INDUSTRY GROWTH ASPIRATION
BLNG PLANT EXTENSION = Assets Rejuvenation Plan (ARP)
 Maintain current 7.2 million ton / annum capacity
 Gas require: ~ 7.5 TCF
BLNG PLANT EXPANSION – 6th Train
 6th Train: world scale capacity: 4 million ton per annum
 First cargo delivery: after 2010
 Gas require: ~ 4.2 TCF
In line with the Brunei Government aspiration to strengthen the oil and gas industry whilst diversifying the economy, Brunei LNG has embarked on the Master Plan Study to expand its existing 7.2 million ton per year capacity by a world scale LNG train of around 4 million ton per year.
As I mentioned just now, there are 5 five trains in the existing Brunei LNG plant. With the expansion, there will be 6 trains in future.
The Master Plan Study also includes the rejuvenation of the existing plant to extend its operating life by another 20 years when its existing contract expires in 2013.
On the Brunei LNG extension plan, about 7.5 TCF of gas is required.
Meanwhile for the plant expansion, it requires gas of about 4.2 TCF. The first LNG cargo delivered from the 6th train is planned after 2010.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 17

18. BLNG PLANT EXTENSION & EXPANSION
330
300
EXPANSION
4.2 TCF
210~215
200
Cargo/a
Existing Contracts
EXTENSION -
7.5 TCF
LNG B
This slide shows the no of expected LNG cargoes with the Brunei LNG extension and expansion plan.
During the existing long term contract with the Buyers, it is estimated 210 – 215 B class cargoes will be available from the Brunei LNG plant.
By fully rejuvenating the plant to extend its lifetime, the no of cargoes of 210 – 215 will be maintained until 2033.
In addition to the cargoes produced from the existing plant, it is estimated 115 –120 cargoes will be produced from the expansion plant or the 6th train.
With the extension and expansion of the Brunei LNG plant, about 330 cargoes will be delivered.
2033
2013
2006
2026
2020
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 18

19. RECENT DEEPWATER ACREAGE
…the next deepwater activity
and opportunities in Brunei
For Train 6, and also for various other downstream developments currently being considered in Brunei, all eyes are on the deep waters offshore Brunei.
The acreage released for exploration and production in the first open bid round were comprised of two deepwater blocks, namely Block J and Block K. They are located some 100 km from the coastline and lying in water depths of 1,000 to more than 2,500 m. Each blocks measure about 5,000 sq km in area.
The legal and fiscal terms under which the two deepwater blocks were offered are based on the now widely used PSC model, familiar to the international oil and gas industry. It is introduced in Brunei for the first time during the launch of the bid round in January 2001.
The onshore block, namely Block L, was also released for bidding in January It area is about 2,250 sq km.
Petroleum Unit Global LNG Summit –18 December 2003
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20. OUTCOME OF BIDDING ROUND
BLOCK J
TotalFinaElf (60%)
BHP Billiton (25%)
Amerada Hess (15%)
BLOCK K
Shell (50%)
Conoco(25%)
Mitsubishi Corp. (25%)
The offered deepwater blocks, J and K, were awarded to two separate group of companies led by TotalFinaELF and Shell International, respectively.
The partners in the TotalfinaElf group include BHP Billiton with a 25% stake and Amerada Hess which holds the remaining 15%. Shell International partners are Conoco and Mitsubishi with an equal stake of 25% each.
TotalFinaElf and Shell International companies are well established in Brunei Darussalamm either directly or through subsidiaries.
Following the evaluation of bids submitted in November, 2001 the deep water blocks were awarded to two groups of consortia led by Shell and TotalElfFina.
No bids were received for the onshore Block L area probably due to the competition against the more promising ultra deep water blocks J and K and possibly the somewhat unfavorable fiscal terms specified for the area with its attendant exploration risks.
Petroleum Unit Global LNG Summit –18 December 2003
BRUNEI DARUSSALAM Washington D.C Slide 20

21. GAS INDUSTRY DEVELOPMENT IN BRUNEI DARUSSALAM
THANK YOU
FOR YOUR ATTENTION
Petroleum Unit Global LNG Summit –18 December 2003
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Petroleum Unit Global LNG Summit –13 December 2003
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