Brunei warns of oil crunch
Brunei’s energy minister has warned people of this cradle-to-grave welfare state to curb their “extravagant lifestyle” of wasting fuel and electricity, saying the country’s dwindling oil reserves will not last forever.
Energy Minister Yahya Begawan Mudim said the government expects to spend $144m (€114m) on public subsidies this year to keep retail prices of petrol and diesel low, up from $106m (€84m) in 2005.
Because of such subsidies, the market price for diesel is cheaper than bottled drinking water, while low energy rates have made this tiny sultanate on Borneo island one of the highest per capita users of electricity in Asia, on par with Japan and South Korea, Yahya said in a speech to corporate leaders on Saturday.
“We must therefore get out from our belief of a bottomless well in our oil and gas reserves,” Yahya said, noting that last year’s subsidy amount could have funded important development projects such as the construction of eight new schools.
“The government sector, commercial sector and the public can no longer afford to do ‘business as usual’ now,” Yahya said. “We must formulate strategies to switch from extravagant lifestyles to one where energy efficiency and conservation are given great importance.”
Brunei’s vast oil reserves were discovered more than a century ago and became a major export for this tiny country before World War II.
Oil and natural gas account for nearly half of the nation’s gross domestic product. But some experts say its proven oil reserves could run dry in around a decade.
Yahya noted officials have sought to control the outflow of subsidised fuel by imposing conditions on the volume of petrol that can be purchased by customers since January 1, 2006.
“Even if the cost of subsidy and production can be reduced, our perception in the utilisation of energy needs to be altered so that we could optimise the value of oil and gas produced,” Yahya said.
“Without discovery of new reservoirs with large volumes that can be produced at a low cost, we would not be able to lower the current high average cost of production even if the required state-of-the-art technology and expert resources are available,” he added.
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