Malaysia, Thailand conclude landmark oil-gas pact

Malaysia, Thailand conclude landmark oil-gas pact

KUALA LUMPUR (AFP): Malaysia and Thailand have signed a
landmark 50-year pact for oil and gas exploration, their premiers
describing it as a pacesetter for greater Southeast Asian
cooperation.

"The agreement reflects the idea of brothers drinking from the
same well. It will surely strengthen the solidarity and community
spirit of the Association of Southeast Asian nations (ASEAN),"
Thai Prime Minister Chuan Leekpai said Thursday.

Apart from Thailand and Malaysia, ASEAN comprises Brunei,
Indonesia, the Philippines and Singapore.

Chuan and Malaysian counterpart Mahathir Mohamad agreed during
talks after the Thai leader arrived here earlier Thursday to work
together with Indonesia to promote a trilateral growth area, and
discussed a plan to link a Thai highway to Malaysia and
Singapore.

The landmark pact enabled the Malaysia-Thailand Joint
Authority (MTJA), oil companies of the two countries, and the
Thai wing of U.S.-based Triton Energy Corp. to exploit petroleum
resources in a 7,250-square-kilometer (4,500 square mile) area.

The MTJA, officially launched by the two premiers, was
established under a memorandum of understanding signed in
February 1979, but the two governments had been talking terms
since then.

Royalties

Under the pact, Triton Oil Co. of Thailand, Malaysian oil
corporation Petronas's exploration arm Petronas Carigali and
Petroleum Authority of Thailand's affiliate PTT Exploration and
Production would pay the governments a royalty of 10 percent of
gross production.

The contractors could deduct up to 50 percent of gross
production to recover exploration costs and the remaining profits
are to be split 50-50 with the MTJA, officials said.

Gas exploration was expected to take five years with another
five years for development, while production is put at 20 years
for gas and 25 years for oil, officials said, expressing
confidence that the venture would be viable.

Co-chairman of the MTJA Ahmad Rithauddeen Ismail said the pact
was reputedly "the first of its kind in the world in terms of
exploiting resources in overlapping boundaries for mutual benefit
of claimants."

In an apparent reference to the disputed Spratly islands in
the South China Sea, Mahathir said: "I am sure this novel
approach is going to be a model for the settlement of many
similar overlapping claims where there are riches to be
extracted."

The Spratly chain, believed to be rich with petroleum
resources, is being claimed in whole or part by Brunei, China,
Malaysia, the Philippines, Taiwan and Vietnam.

During their talks, Chuan and Mahathir reviewed the progress
of the Indonesia-Malaysia-Thailand Growth Area (IMTGA) and wanted
sea ports straddling the area to be further developed to cope
with increasing trade and investment, officials said.

The IMTGA covers northern peninsular Malaysia, northern
Sumatra in Indonesia and southern Thailand.

Among projects planned for the area were a regional television
station in Medan, Indonesia, a tri-modal land-bridge across the
Isthmus of Kra in southern Thailand and power generation
facilities in Malaysia.

Malaysian Foreign Minister Abdullah Badawi, briefing reporters
after the talks, said Chuan informed Mahathir that Thailand
planned to build highways which would eventually link a
superhighway running along peninsular Malaysia to Singapore.

"This is with a view to linking Bangkok, Kuala Lumpur and
Singapore," Abdullah said, adding that such a link and the newly-
opened Friendship Bridge joining Laos and Cambodia would be a
milestone for regional cooperation and friendship.