Reports on oil pipeline across Malaysia

Malaysia mulls major oil pipeline across peninsula
16 Apr 07

Malaysia said Monday it is looking into a proposal to build a pipeline that will transport oil across the north of its peninsula, bypassing the piracy-prone Malacca Strait.

Reports have said the proposal involves the construction of two oil refineries and a 312-kilometre (194-mile) pipeline from northwestern Kedah state to northeastern Kelantan state.

Deputy Prime Minister Najib Razak Monday confirmed the project, but said it was still only at proposal-stage.

“It’s only a proposal. It’s not been finalised yet. They are still looking at the details,” Najib Razak told reporters.

According to the state Bernama news agency, tankers will offload crude oil from the Middle East in the coastal town of Yan, Kedah for refining.

The oil will then be transported through the pipeline across the north of Malaysia to Bachok on Kelantan’s coast, for distribution to countries in the Asian region, including China.

The pipeline would bypass the 960-kilometre Malacca Strait, which runs along Malaysia’s western coast, and is notoriously vulnerable to pirate attacks, with fears it could also be a tempting target for terrorists.

Half of the world’s oil shipments currently pass through the strategic Malacca Strait, the busiest seaway in the world.

Kedah’s chief minister Mahdzir Khalid said last month the project is a joint venture between the National Iranian Oil Company and Malaysian firm SKS Development, according to Bernama.

“The state government will have equity in the company undertaking the project; the percentage is being discussed,” Mahdzir was quoted as saying.

Other investors from Saudi Arabia and China are also involved, he said.

The project is expected to cost 50 billion ringgit (14.5 billion dollars) and site clearing work could start as early as July, with construction to commence next year until 2015, Mahdzir said.

“It is estimated that 350 billion ringgit a year in the form of oil derivatives will be marketed through Malaysia with the refinery’s capacity of six million barrels a day and a 30-day stock of 150 million barrels,” he said.

Malaysia plans US$14-billion refineries, pipeline to cater for Middle East oil

Associated Press
11 Apr 07

Malaysia will soon start building two refineries and a pipeline to process and pump oil from the Middle East — a major project that could help tankers sidestep one of the world’s busiest shipping routes, an official said Wednesday.

Investors from China, Iran and Saudi Arabia will each take a stake in the 50 billion ringgit (US$14.2 billion; €10.6 billion) initiative in northern Malaysia, according to a government official in the northwestern state of Kedah.

Construction should begin in Kedah in August, with at least one coastal refinery that can process 200,000 barrels a day scheduled to be operational by the end of 2010, the official said on condition of anonymity because he was not authorized to make public statements.

The creation of the 320-kilometer (200-mile) pipeline, cutting from Kedah to northeastern Kelantan state, would allow Middle East oil shipments to reach the South China Sea without traveling through the Malacca Strait, which lies off peninsular Malaysia’s west coast.

The strait, which now carries half the world’s oil shipments, is shared by Malaysia, Indonesia and Singapore. It is notorious for robberies and kidnappings by pirates, but attacks have fallen following increased security patrols in 2005.

About 70 percent of the funds to build the refineries and pipeline will likely come from foreign direct investment, creating “ample opportunities of income and job creation for growth and development,” investment bank Aseambankers said in a research report earlier this month.

The crude oil will be moored off Kedah, refined and be transmitted through the pipelines to Kelantan and subsequently be loaded on to tankers and shipped to South Korea, China and Japan, bypassing Singapore, the report said.

However, laying the pipes could be an “arduous and challenging feat,” the report noted, stressing that environmental and land issues would need to be addressed.

Malaysia’s national oil-and-gas company, Petronas, is not involved in the project because the crude oil would be coming from the Middle East, not Malaysia, Aseambankers said.

Malaysian firms Merapoh Resources Corp. and SKS Ventures will build the refineries, while Trans-Peninsula Petroleum will construct the pipeline, the Kedah official said.

The entire project’s deadline will be finalized later, he said.

SKS Ventures already has links with the Middle East oil industry. The company recently signed a US$16 billion (€12 billion) deal with Iran to develop two gas fields in southern Iran

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