Trans-Peninsula Petroleum Sdn., the developer of a $7 billion pipeline across Malaysia, is in talks to sell some of the venture to Middle Eastern oil producers to help them bypass one of the world's busiest shipping routes.
Overseas oil companies will be the pipeline's biggest users and may own 70 percent of the company, said Syed Izhar, deputy chairman of Trans-Peninsula. The company, in talks with as many as four Middle Eastern investors, needs to secure funding and overcome political opposition to complete the project.
The 300-kilometer (186-mile) pipeline would save companies such as Saudi Aramco three days in transport time to China, the world's second-biggest oil user, and avoid the piracy-prone Malacca Straits where tankers were among 11 ships attacked last year. Neighboring Thailand's plan to build a pipeline has yet to materialize, more than seven years after it was first proposed.
The first of three pipes, valued at about $2.3 billion, will be ready in 2011 and the project is due to be completed in 2014, Trans-Peninsula and Ranhill said last month. The pipeline, which will join Yan in Kedah to Bachok in Kelantan, will initially be able to transport 2 million barrels of oil a day.
Offshore mooring facilities will be built at both ends of the pipeline to accommodate very large crude carriers.
Building storage facilities will account for about 60 percent of the project's cost, Syed Izhar said. The first storage facility, to be built in Kelantan on Malaysia's east coast, will have the capacity of storing 60 million barrels.
``Demand for an alternative shorter route does make sense,'' according to a May 30 report by OSK Research. The pipeline will save three days compared with transporting oil through the 960-kilometer Malacca Strait, the report said.
Companies could save 69 cents a barrel, or $1.38 million a day, compared with shipping crude oil on Asian routes from the Persian Gulf on an Aframax tanker, according to OSK Research. So-called Aframax tankers carry about 600,000 barrels of oil.
Opposition leader Lim Kit Siang from the Democratic Action Party wants the government to ``freeze'' the project.
``The project lacks transparency,'' Lim said in a telephone interview in Kuala Lumpur. ``How can they approve the project'' without conducting a study to determine its ``feasibility, its viability and its'' impact on the environment?
"We must be ready to dare all for our country. For history does not long entrust the care of freedom to the weak or the timid. We must acquire proficiency in defense and display stamina in purpose." - President Eisenhower, First Inaugural Address
Thursday, June 21, 2007
Malaysia pipeline news
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