Malaysia, Thailand agree to jointly buy natural gas
Malaysia, Thailand agree to jointly buy natural gas
ALOR SETAR, Malaysia (Agencies): Malaysia's state-oil firm Petronas and Petroleum Authority of Thailand (PTT) on Saturday agreed to jointly purchase natural gas from an offshore basin in Malaysia-Thailand's overlapping joint development area.
The two companies also agreed to build together a gas pipeline system and two gas separation plants at Songkhla in southern Thailand.
"Under the gas sales agreement, Petronas and PTT, will jointly buy on an equal basis natural gas from the joint sellers, namely the Malaysia-Thailand Joint Authority and the contractors for the block A-18, which are Petronas Carigali Sdn Bhd, Triton Oil company of Thailand and Triton oil company of Thailand (GDE) Ltd," an official statement said.
Malaysian Prime Minister Mahathir Mohamad and his Thai counterpart Chuan Leekpai witnessed the signing of the agreements in Malaysia's northern Kedah state.
For the first phase the sellers will deliver the gas at an initial rate of 390 standard million cubic feet per day for 20 years beginning from mid-2002 to Petronas and PTT.
The statement said that subject to gas demand the second phase is expected to commence by 2005 and the sellers will be required to supply an additional 300 standard million cubic feet per day.
The gas from the offshore block will be landed for processing at a proposed gas separation plant via the trans Thailand- Malaysia gas pipeline which will be extended from Songkhla to Changlun in Kedah state.
The offshore natural gas block is on the east coast of Thailand and Malaysia and the joint development area covering 7,250 square kilometer in the gulf of Thailand has a proven and probable gas reserve of about 9.0 trillion cubic feet.
The pipeline is about 360 km (225 mile) long and each of the two gas separation plants has a processing capacity of 425 million cubic feet per day.
The pipeline and the gas separation plants are estimated to cost $800 million.
The investment for development of the phase one of the gas development for Cakerawala field in the joint development zone is also estimated at $800 million.
Malaysia and Thailand described the joint project as an impressive feat and a model for others to follow.
"This is a landmark agreement because this is the first time two neighboring countries with an overlapping claim over an area of sea have agreed to cooperate jointly and share resources," Malaysian Prime Minister Mahathir Mohamad told reporters.
"It is a good moment for future relations of both countries."
Thai premier Chuan Leekpai suggested the gas sales agreement was a blueprint for exploiting the mineral resources believed to lie below the disputed Spratly Islands in the South China Sea.
"The agreement is a model for the international community to resolve territorial disputes in a practical and beneficial manner," said Chuan in an apparent reference to the Spratlys.
"This is a good moment for us to celebrate," he said, after the two leaders witnessed the signing of the deal.