Brunei(officially the State of Brunei Darussalam) is the smallest of the Southeast Asian countries and is about the size of the US state of Delaware. It is located on the Northern coast of Borneo and almost completely surrounded by Malaysia. Brunei is close to vital sea lanes through South China Sea linking Indian and Pacific Oceans.

This small country has a population of only 388,190 (July 2009 est.). Brunei has the third highest Human Development Index among the South East Asia nations, after Singapore and Hong Kong, and is classified as a Developed Country. The government provides for all medical services and subsidises rice and housing. Its GDP per capita was estimated in 2009 as $50,100 ranking 9th worldwide and 1st in Asia. Nearly half of its GDP come from Crude oil and natural gas production.


::: OIL WEALTH :::

The majority of Brunei's wealth comes from oil and liquefied natural gas production. It ranks as third in Southeast Asia in oil production and fourth in the world in natural gas production. Oil production began in Brunei in 1929, with the discovery of the giant Seria Field on the coast. Production from Seria peaked at around 100,000 bbl/d in the 1950s. Significant developed oil reserves are believed to remain in Brunei's current producing fields. However, given application of advanced technology and modern drilling techniques are in doubt.
This one of the most affluent nations in the world is suddenly waking up from its swoon of abundance and wondering how oil production will support itself. 388,190 citizens are blaming Prince Jefri Bolkiah, favorite brother of the sultan royal family that is one of the oldest continually reigning monarchies, dating back almost 600 years, who is ruined by a discovery of oil. He had wasted cash reserves of this oil blessed tiny county for years until he got to the bottom few years ago. He was given the dual positions of finance minister and head of the Brunei Investment Agency, which had the task of investing the huge oil.
But only recently have they learned what he was doing with the money: building palaces, apartment complexes and marinas; buying luxury hotels, thousands of cars and dozens of aircraft; supporting a large, jet-setting retinue of wives, mistresses and 35 children; decorating his palaces with mounds of baubles from the London jeweller Aspreys, gold-plated toilet brushes, a 12-foot-high bronze rocking horse and so on.


Gone are Brunei's days of "cheap and easy" production of oil and gas as global economic recession and fluctuating oil prices have called for more costly investments to export of the country's primary source of revenue and energy. Oil prices peaked at US$140 per barrel in 2008 and dropped dramatically to its current price of about US$50 per barrel. The drop in the price of oil and the global demand for black gold as a result of the global economic crisis has prompted further exploration and development of oil and gas reserves. Such activities are conducted in deep water sites that require the utilisation of the latest technology and thus, greater expenditure to carry out these. As the Energy Minister at the Prime Minister's Office, Pehin Dato Hj Mohammad said, there is no more cheap and easy oil production. People are worrying about the future of Brunei because of difficulties in finding new reserves due to absence of investing new technology. The country is not able to support all of its needs for foodstuffs because of the lack of land and people to work the land and high dependency on oil production. The government is now trying to achieve agricultural and tourism development on the rise to be self-sufficient in future without oil.


While the government is putting efforts on improving agricultural development, Brunei has been looking for new oil reserves. The country has been fighting over crude oil reserves in Exclusive Economic Zone (EEZ) in "open areas" (as apposed to disputed areas in the South China Sea). EEZ is called "the best piece of deep water in South East Asia." One possible complication is that Brunei's EEZ overlaps with other countries' South China Sea claims. China, Taiwan, Philippines, Malaysia, Indonesia, Vietnam, and Brunei are all fighting over this area of guaranteed plentifulness. Malaysia and Brunei have agreed to co-operate for oil and gas joint ventures in this area.

Malaysia and Brunei explore oil and gas project (Update)

BANDAR SERI BEGAWAN: Malaysia and Brunei have taken a step forward to explore the possibility of oil and gas joint ventures in the maritime territories they both share, although details have yet to be worked out.
This followed a “highly successful meeting” between Malaysian Prime Minister Datuk Seri Najib Tun Razak and the Sultan of Brunei, Sultan Hassanal Bolkiah, who is also the Prime Minister. A very happy-looking Najib told a press conference Thursday that his private meeting with the Sultan in conjunction with the two countries’ 13th annual consultation had ended on a “very satisfactory” note.
“This annual meeting has achieved very satisfactory results. The Sultan said he looks forward to greater levels of cooperation between us.
“The agreement between our two countries to settle the land and maritime boundary demarcation is one of the big milestones ... that will bring our bilateral relationship to new heights,” he said.
The boundary issue has been agreed to in principle, he said. There was still a large section of land at the Sarawak-Brunei that needed to demarcated and a topographical survey had to be conducted.
“The agreement (on the land and maritime boundary demarcation) will be final. The possibility of joint exploration (for oil and gas) will be worked out later,” Najib said.
Malaysia has proposed a role for its national oil and gas company Petronas in the joint venture, although that role had yet to be worked out, he told reporters before concluding his three-day official visit to this oil-rich sultanate. He declined to give details on Petronas’ proposed role.
In March, Malaysia and Brunei had agreed in principle to resolve outstanding overlapping claims on the land and maritime boundary covering Limbang, a division in Sarawak sandwiched by the two borders of Brunei, following a meeting between the then Prime Minister Tun Abdullah Ahmad Badawi and the Sultan.

New York Times articles : From Oil Rich to Garage Sales
Bandar Seri Begawan articles
South China Sea :
Oil and Gas Discovery Centre Brunei :
Geopolitical(Boundary) Issue :