Malaysia signs on oil pipeline project partners

Malaysia's ambitious plan to build a $7 billion trans-national oil pipeline to ship Middle East crude to big Asian importers moved a step closer to reality after several regional firms signed on as partners. The pipeline would stretch from the west coast town of Yan to the small fishing port of Bachok in the east. The 310 km (193-mile) pipeline aims to cut time and costs by bypassing the crowded Malacca Strait, but observers have been skeptical as similar ventures for a Southeast Asian shipping short-cut over the past few decades have failed to materialize. Compounding these doubts is the fact that the pipeline project is being developed by a small, loss-making company owned by two little-known Malaysian businessmen.

"We are not going to displace the 12 million barrels of oil that pass the Straits of Malacca. We are going only for about 30 percent of the volume that goes through the Strait of Malacca, to ease the congestion in the strait," said Trans-Peninsula Petroleum Chairman Rahim Kamil Sulaiman. Trans-Peninsula Petroleum plans to build the pipeline over eight years from 2008.

Despite government backing, some analysts have questioned the rationale for the pipeline, saying it remains cheaper to sail around Singapore than to unload a super-tanker at Yan, pump the crude to Bachok and put it on another tanker. A similar project in Thailand was scrapped two years ago due to rising steel costs, safety issues after the tsunami and environmental concerns.

(2007-06-14 12:09:43 SGT) [Energy] Permalink

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