BANDAR SERI BEGAWAN – Brunei still out of deep recession after record-low oil production in the second quarter of 2022 triggered quarterly GDP decline of 4.4%, the largest in six years. I am struggling with
According to the latest GDP report from the Department of Economic Planning and Statistics (DEPS), the hydrocarbon sector contracted sharply by 9.3% year-on-year in the second quarter amid major disruptions in oil and gas production.
Crude oil production fell from 111,100 barrels per day to a record low of 94,500 barrels per day, falling below 100,000 barrels per day for the second time in less than a year. Oil production plummeted to his 97,100 barrels per day early in the third quarter of 2021 after hundreds of his COVID-19 cases were detected at the Champion 7 offshore field.
Natural gas production also fell from 31.5 million cubic meters per day in Q2 2021 to 27.3 million cubic meters in the same period of this year, with LNG production at 852,700 million British thermal units (mmbtu/d) per day. to 685,400 mmbtu/. d.
DEPS attributes the decline in oil and gas production to “unscheduled maintenance and refurbishment activities.”
At a press conference on Monday, Second Minister of Finance and Economy Hj Mohd Amin Liew Abdullah said maintenance of the oil facilities, originally scheduled during the COVID-19 pandemic in 2021, had to be postponed to this year.
“Once maintenance is complete, next year’s GDP will increase,” he said in response to a reporter’s question about Brunei’s post-COVID economic outlook.
Brunei’s crude oil production has been on a downward trend since 2006.
It was previously reported that a significant number of the country’s wells and platforms are aging, causing production challenges.
The drop in oil production will occur in the second quarter of 2022 when average oil prices rise 72.1% year-on-year to reach US$119.87 a barrel.
The upstream oil and gas sector, which accounts for 56.4% of GDP in Q2 2022, has maintained negative growth since Q1 2020.
A sharp contraction in GDP in the second quarter of 2022 means that Brunei’s economic growth has been in negative territory for seven straight quarters.
The Sultanate was expected to end 2022 with a modest gain, further casting doubt on its growth projections.
The last time Brunei suffered a prolonged recession was in 2016 when oil prices crashed to $34.62 a barrel.
Downstream sector gains big
While economic recovery remains elusive in the upstream oil and gas sector, downstream activity surged 32% year-on-year in the second quarter.
DEPS data showed that the non-oil and gas sector, which includes downstream oil and gas activity, increased by 1% on the back of increased methanol and fertilizer production.
Methanol production increased 20.5% from 136,921 tonnes in Q2 2021 to 164,926 tonnes over the same period this year.
Additionally, Brunei Fertilizer Industries commenced production of ammonia and urea earlier this year, further contributing to strong growth in the downstream sector.
The downstream oil and gas sector was expected to lead the economic recovery this year, with 30% growth projected.
Service sector puts an end to positive growth
The services sector contracted 2.8% year-on-year, marking its fifth consecutive quarter of positive growth after the economy fully reopened.
Revenue losses were reported in financial subsectors (-15.7%), wholesale and retail trade (-5.2%), government services (-4%), and restaurants (-2.1%).
The air transport sub-sector posted the biggest profit in the second quarter, surging 114.3% as COVID-19 travel restrictions were lifted.
From April to June, aircraft arrivals increased from 1,261 to 33,067 year-on-year, while aircraft departures increased from 7,617 to 37,687 during the same period.
Other bright spots in Brunei’s economy were business services (9.9%), hotels (7.8%), telecommunications (5.5%), ground transportation (4.8%) and real estate (2.3%).
According to DEPS, positive growth in the telecommunications sub-sector was supported by growth in internet and mobile phone subscribers, which increased by 2.5% and 0.9% respectively.
On the other hand, agricultural sector income fell for the first time in two years, down 6.7% due to a sharp decline in forestry activity (34.3%).
Exports of goods and services also fell by 7.9% year-on-year, while imports increased by 8%.