Oil-rich Brunei said Monday it may import oil under a new economic diversification strategy aimed at creating jobs by investing heavily in the downstream oil and gas sector.
Brunei needed to broaden its industrial base and reverse its high budget deficit and rising unemployment, the permanent secretary in the prime minister's office, Pehin Yahya Abu Bakar said.
Downstream industries under consideration included an oil refinery using imported Middle East crude, production of petrochemicals such as amonia urea and methanol, and energy intensive industries such as aluminum smelting.
A decision was expected by the end of the year.
"We hope that the industries identified by this study will help to create more jobs, more spin-offs in terms of creating more industries downstream, and also perhaps get rid of some of the budget deficit," Pehin said.
The project director of the "master plan study on downstream oil and gas industry," Australian consultant Ian Williams, admitted it would be a "challenge" coming to accept that a refinery based on imported crude had a better economic potential than refining local crude.
Abdul Latif Abdul Rahman, head of downstream industry at the petroleum unit, said an in-depth study had been undertaken into the viability of an export-oriented refinery.
"From the result of the comprehensive simulations that we did, imported Middle East crude show better margins compared to our local Brunei crudes," he said, adding local crudes fetched premium prices due to a low sulphur content.
"So it makes sense that we continue exporting these Brunei crudes and import Middle East crudes for our feedstock for this refinery being considered."
Other spin-off industries being looked at include plastics, textiles, packaging materials, synthetic rubber, agricultural chemicals and pharmaceuticals.
"We hope to pave the way for the development of small and medium enterprises in Brunei Darussalam and also the setting up of service industries," Abdul Latif said.
The Brunei Darussalam Economic Council has identified four symptoms of the unsustainable nature of the local economy -- income lags behind population growth, a chronic budget deficit, rising unemployment and a weak private sector.
Oil and gas account for 80 percent of Brunei's exports and 50 percent of overall economic activity -- BANDAR SERI BEGAWAN (AFP)
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