KL okays $2b oil pipeline

KL okays $2b oil pipeline

TOKYO (AFP): Malaysia has approved a planned consortium to be formed by Japanese and other Asian companies to build an oil pipeline across the Malaysian peninsula at a cost of US$2 billion, it was reported here yesterday.

The Nihon Keizai Shimbun said the Malaysian government gave its approval in late September, paving the way for the pipeline near the Thai border to be operational by 2002.

The Thai government is expected to approve the project soon, the business daily said.

The pipeline is aimed at easing heavy maritime traffic in the Straits of Malacca, the main route through which crude oil is transported from the Gulf to East Asia.

A total of 11 private and government firms from Japan, Malaysia and Thailand will set up a preparatory firm to be named Trans Peninsula Oil by the end of this year, the daily said.

Major participants are Japanese plant engineer Chiyoda Corp. and Malaysian developer East West Bridge, with partners including Japanese trading houses Mitsui and Co. Ltd. and Marubeni Corp. as well as Thailand's petroleum public corporation.

The joint firm will be set up in Malaysia with initial capital of $3 million, Nihon Keizai said.

Earlier this year, Chiyoda officials said participants in the project were finalizing a series of feasibility studies. Construction is expected to start in 1999 with initial operations scheduled for 2001, the officials said.

The pipeline will stretch for 190 kilometers (118 miles) between Alor Setar in Malaysia and Sai Buri in Thailand, and will be capable of carrying two million barrels of crude oil a day.

Under the plan, oil produced in the Middle East will be unloaded at Alor Selar on the west coast of the peninsula and piped to Sai Buri on the east coast for shipment to countries such as Japan, South Korea and Taiwan.

The Chiyoda officials said the project also involved the construction of 48 tanks on both sides of the peninsula, each capable of holding 630,000 barrels.