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.