Regional LNG: Brunei LNG to upgrade facilities

Brunei LNG, facing increasing competition from regional and Middle East suppliers, seeks to invest almost US$300 million over five years to upgrade ifacilities, its managing director said on Monday.

"We have five LNG trains each with around 1.3 -1.4 million tonnes a year capacity and we are looking at building an additional train of four million tonnes a year capacity," Hamdillah Wahab told Reuters.

"Brunei is looking at investing half a billion Brunei dollars over the next five years in upgrading LNG facilities," he said on the sidelines of a gas conference in Singapore.

Brunei LNG is 50 percent-owned by the government, 25 percent by Brunei Shell Petroleum Co. and 25 percent by Japan's Mitsubishi Corp.

Hamdillah said a final decision would be made by 2006/2007 as the investment was dependent on the Southeast Asian kingdom's gas reserves and market competition with many new projects were coming onstream.

"Reserves are now sufficient to meet existing contractual obligations and an extension for another 10 years easily," he said.

Brunei has contracted to sell 6.7 million tonnes per year of LNG up to 2013 and it has three Japanese customers that take about 90 percent of its production, while South Korea takes 10 percent, Hamdillah said.

Brunei Shell told Reuters last week that natural gas production in 2004 was forecast around 180 "B" class cargoes, compared with 193 "B" class cargoes, or the equivalent of 9.5 billion cubic metres, last year.

Delivery of LNG was seen at between 201 and 204 "B" class cargoes this year compared with the 2003 record of 214 cargoes.

Natural gas output for the whole of Brunei rose to 1.23 million cubic feet a day in 2003 from 1.14 million cu ft per day in 2002, an official with the Petroleum Unit of the Prime Minister's Department, had said.

Hamdillah said Brunei LNG had just completed a review of prices with Korea Gas Corp (KOGAS) under a long-term contract that would expire in 2013. Brunei LNG had completed a price review with Japan last year.

Separately, Malaysia LNG (MLNG) in which state oil and gas firm Petronas has a controlling stake, said a price review of a long-term contract from its MLNG Dua (Two) plant was also under way with Japanese customers.

Asked if MLNG was selling LNG on the spot market, MLNG chief executive officer, Abdullah Karim told Reuters it had sealed a two-year supply contract recently with Japan and also a one-year contract with Japan, both with the possibility of extensions.(*)