Patrice Girard, Manging Director and CEO of Brunei LNG, discusses economic diversification in Brunei, commercial relations with Japan within an energy context, and the competitive advantages his company offers its customers
We have seen negative results in terms of macro indicators in the last few years as a result of the fall in commodity prices. The response of the government has been to intensify the economic diversification process – focusing efforts on areas such as FDI, intensifying the development of small and medium-sized enterprises and be improving the ease of doing business. How do you see the current investment climate in Brunei Darussalam as compared to other ASEAN countries?
Compared to the countries that I have worked in before, Brunei Darussalam is more welcoming and attractive to businesses. Brunei’s location in the Asia-Pacific region gives it access to a huge growing market in ASEAN and the North Asia region. This provides a platform where Brunei businesses can develop partnerships and penetrate countries like Philippines, Indonesia, and Thailand which have a huge potential for goods and services, as well as our LNG.
The energy sector in Brunei Darussalam is an important part of the economy and, as such, plays an important role in the diversification process. In that sense, how do you welcome foreign investment; and what role does it play in the diversification process?
It is important not just to attract foreign investment but also attract knowledge as this allows greater synergies and business spin offs. Getting more know-how and knowledge in the country will be beneficial in the long run. It feels like a natural approach to diversify Brunei Darussalam’s economy through this method.
More importantly, we help provide a stable supply of electricity to the national grid and therefore to businesses in the country. This means that for a company that would come here, energy is secure and the cost is reasonable compared to other places. It is an advantage for anyone who comes in and if they have significant energy consumption.
The government has an ambitious plan for the energy sector to contribute up to 36 billion dollars to the GDP by 2035. What do you see are the challenges and opportunities as a result of the development of the energy sector?
In my opinion, there is a lot of potential along the oil and gas value chain in this country. The recent efforts by the government in attracting investment in the downstream sector – such as the establishment of the Hengyi refinery in Pulau Muara Besar, and the hydrogen plant by Chiyoda and Mitsubishi Corporation – reflect these efforts.
The Japanese have a good relationship with Brunei and are highly competent within the energy sector. What do you see as drivers that will convince Japanese companies to come and invest in Brunei’s energy sector?
One of our shareholders is the Mitsubishi Corporation, and they have been here for many years already. They have a strong presence in Brunei as they are in many other countries. They are working with us and they are supporting our efforts to be a competitive LNG supplier in Japan. They are also active in other sectors — they have developed a solar farm which they handed over to the government. They are working on a possible hydrogen plant where they use gas coming from our plant. A company like this one is continuously looking for opportunities and expanding on the energy side. Thus, Mitsubishi is a good example of where a Japanese company has been a success story.
In terms of the LNG sector, we have seen that the sector is growing faster than expected, especially in Asia where there is increased demand from China. What is your take on the sector?
In terms of trends, what we can see is that there is always more demand for energy, and at the same time, there are also new rules. I am beginning to see new strengths that are existing everywhere. Coal is slowly reducing, and LNG is well-placed to be the choice of cleaner energy. There is ample supply and there might even be too much supply in the years to come, but hopefully that will stabilize. LNG is also the best option in terms of managing commitments to reduce carbon emissions. LNG is becoming the preferred choice of clean, affordable and abundant energy.
Japan has always been your largest client. Can you explain your long-term relationship with Japan that has existed not only in the Brunei energy sector but also in terms of strategic alliances in energy security?
Our first cargo went to Osaka in December 1972, and since then, we have delivered more than 230 million tons of LNG to our Japan customers, so it is very significant and unmatched in the industry. Japan represents two-thirds of our deliveries. Building relationships takes time and a lot of support and cooperation over the years. The reason why we have endured a long relationship with Japan is that they strongly believe in the product and service we provide to them. I was in Japan visiting these customers a few weeks ago and we talked about the industry in general. We share the same view that LNG will still play a significant role in the energy mix of Japan in the long term.
Of course, we acknowledge that there are emerging LNG markets in the ASEAN region which is on our door step. In that sense, Brunei LNG is in a good position to leverage our relationship with Japan customers to grow our supply portfolio, and to establish new supply relationships with customers in the growing ASEAN markets who are demanding reliable and stable energy supply.
What are your competitive advantages to satisfy your clients?
We have nearly 50 years of LNG experience. The company had adapted to various changes and business cycles in the industry. We have invested heavily in our plant reliability and there is more to come. This platform built up over nearly five decades gives Brunei LNG un-paralleled ability to meet changing customer demands and expectations as the LNG industry continues to evolve. Our location easily gives us access to approximately 100 million tons of LNG demand per annum within seven sailing days from our plant. Therefore, we are in a position to strongly compete with other LNG producers.
You worked in China and now you are in Brunei Darussalam. From day to day, you see that the same kind of people invest in the energy sector. What do you think are the key strengths of Brunei that will provide the leverage for investors to decide?
First, Brunei Darussalam is known as a peaceful and politically stable country with a lot of investment potentials especially in the oil and gas sector. Secondly, we have a young, growing and well-educated workforce that provides a good base of human resources for any foreign investors. Equally, our geographical location in the middle of the ASEAN region gives us the linkages to reach the surrounding markets. His Majesty 2035 vision provides us the strategic directions for the country forward focus, planning and targets that are required to be achieved.