TransPenPipelinePlan:Scrapped!

[GWR]

It looks like Thailand's long & turgid saga of plans for trans-peninsula canals, pipelines, rail lines and roads has been beaten out of the blocks by that slightly more dynamic country to the south:

http://www.bernama.com.my/bernama/v3/news.php?id=260458

May 07, 2007 13:49 PM Malaysia To Build US$7 Bln Trans-Peninsular Oil Pipeline

KUALA LUMPUR, May 7 (Bernama) -- Malaysia has agreed to build a US$7 billion trans-peninsular oil pipeline from Kedah to Kelantan in order to transport oil from West Asia to East Asian countries, Prime Minister Datuk Seri Abdullah Ahmad Badawi said today.

"Yes, we have agreed to the pipeline," he told reporters after opening the World Halal Forum 2007 here.

Abdullah, who is also the Finance Minister, said the pipeline project was a part of the government's move to develop the much-touted Northern Corridor.

"We have always wanted to do more for that area and this also will take care of the Eastern Corridor," he said.

It was reported that Malaysian petroleum transporter Trans-Peninsula Petroleum Sdn Bhd planned to invest US$7 billion over eight years to build a crude oil pipeline to help ships bypass the busy Straits of Malacca.

According to the report, the project will involve the construction of two oil refineries with the pipeline crossing three states, linking from Yan in Kedah to Bachok in Kelantan.

-- BERNAMA

[thai2thai]

"the project will involve the construction of two oil refineries with the pipeline crossing three states, linking from Yan in Kedah to Bachok in Kelantan"

Kedah is opposite Songkhla and Kelantan is the other side of Narathiwat, perhaps we can mobilize our Bangkokians intelligentsia who are so good at rationalizing on toppling elected government in Thailand to descend on the Southern border to help convince the Malaysians to do likewise. They could also teach the Malaysians a thing or two about our self-sufficiency principles. Also, get the NGO's and Greenpeace involved and opposed this crazy scheme on environmental grounds.

Imagine – with all the constructions going on just south of our border - $ 7 billion worth and the hordes of oppositions on our side of the border – the flow of money into this area the next few years might just make the crisis we have with our border states go away. At the very least, our border towns will be lined with beautiful Thai girls servicing the hard-hats from Malaysians.
:mad: :mad:

[GWR]

I have a sort of suspicion that PAS's Kelantan Government are more than capable of upsetting this project all on their own.

[jpatokal]

I have a sort of suspicion that PAS's Kelantan Government are more than capable of upsetting this project all on their own.
They're unlikely to, because Petronas (the Malaysian state oil co) is by a huge margin the biggest taxpayer in Kelantan, and running the pipeline will get them even more money. The one complication is that the federal govn't also likes to use Petronas to punish PAS, eg. Mahathir passed a bunch of laws diverting most of the revenue directly to the federal gov't...

[GWR]

http://www.bernama.com.my/bernama/v3/news_business.php?id=264539

May 28, 2007 21:38 PM
Transpen's US$7 Bln-pipeline To Cut Down Time Taken To Transport Oil

KUALA LUMPUR, May 28 (Bernama) -- The US$7 billion trans-peninsula pipeline to be laid across northern Malaysia will cut down on the time taken to ship oil from West Asia to East Asia to seven days.

Currently, the time taken to ship the oil to its destinations via the Malacca Straits takes 21 days.

The pipeline that stretches from Yan in Kedah to Bachok in Kelantan will shorten the transit time by avoiding the Straits of Malacca which is said to be the second most critical "chokepoint" during the transit.

"The savings in using our pipeline to the oil producers, to oil traders, is enough to even pay for one month of storage," said chairman of Trans-Peninsula Petroleum Sdn Bhd (Transpen), Mohd Kamil Sulaiman.

Speaking at a press conference here, he said the "timing is perfect" for the project to take off as the oil market has shifted to East Asia, with China now being the second biggest importer of oil.

Transpen is the owner and operator of the project.

It inked an agreement with Ranhill Engineers and Constructors Sdn Bhd and Indonesia's PT Tripatra Engineers and Consultants for the design and construction of the 300-kilometer pipeline, on the sidelines of the Third World Islamic Economic Forum (WIEF), here today.

Witnessed by Prime Minister Abdullah Ahmad Badawi and Indonesian President Dr Susilo Bambang Yudhoyono, Transpen also inked a separate agreement with Indonesian firm Bakrie and Brothers tbk for the supply of steel pipes and Al-Banader International Group of Saudi Arabia for the supply of oil.

Mohd Kamil said the pipeline would help ease congestion in the Straits of Malacca where out of 60,000 vessels that transit the straits, 30 percent were oil tankers.

He said the pipeline would divert about 20 percent of the oil tankers.

While analysts have voiced skepticism over the viability of the project considering it would only save oil tankers three days of transit time, Mohd

Kamil countered that the assumptions were based on big tankers. It is not the smaller 80,000-ton vessels that Transpen is targeting, said the chairman.

He said 60 percent of oil tankers crossing the straits were smaller vessels as many ports in East Asia cannot accommodate larger crude carriers.

These smaller tankers currently take about 21 days to transit oil from West Asia and Africa, passing through the Malacca Straits and Singapore and northward to China and Japan.

To be constructed in three phases stretching over seven years, the 48-inch diameter pipeline has a carrying capacity of six million barrels per day throughput (bpd) of crude oil.

Initially, Transpen's capacity would be 60 million bpd of storage and two million bpd of throughput.

After four to five years of operation the system capacity would be upgraded to a maximum of 180 million bpd storage and six million bpd throughput.

On both ends of the pipeline, there will be offshore mooring facilities to accommodate deep-draught tankers that require a minimum depth of 25 meters.

Along the pipeline, in Jeli, Kelantan, there will be a major storage which would hold 90 percent of the entire system's capacity.

"Work would begin in 2008 with land acquisitions made in cooperation with the respective state governments. There will be three phases in the construction spanning a period of seven years altogether," he said.

Transpen said once the first phase of the project, costing US$2.3 billion, is completed by mid-2011, the pipeline will begin to generate income.

Mohd Kamil noted that the project would require equity and project financing both from domestic and foreign sources.

Transpen is owned 30 percent by locals and 70 percent by international investors.

-- BERNAMA

[GWR]

A rather more skeptical article in the Bangkok Post:

New pipeline to bypass Malacca Strait

Kuala Lumpur (Agencies) - Malaysian, Indonesian and Saudi Arabian firms on Monday signed agreements for construction of a pipeline that aims to divert 20 per cent of oil flowing through the strategic Malacca Strait, the project owner said.

The pipeline would also bypass Thailand, which has long debated a similar project across the southern isthmus. The new pipeline is to avoid Thailand by several kilometres by cutting through all three Malaysian border states, but just below the Thai frontier.

Malaysia's Trans-Peninsula Petroleum Sdn Bhd said it signed an agreement with Malaysia's Ranhill Engineers and Constructors Sdn Bhd and Indonesia's PT Tripatra to build the pipeline at an estimated cost of $7 billion over seven years.

Trans-Peninsula Petroleum, the owner and promoter of the project, said it signed separate memoranda of understanding with Bakrie and Brothers of Indonesia to supply pipes, while Al-Banader International Group of Saudi Arabia will provide the oil.

Prime Minister Abdullah Ahmad Badawi first announced the development earlier this month as part of the government's effort to develop Malaysia's northern region.

"We have always wanted to do more for that area and that also will take care of the eastern corridor," he said at the time.

Badawi witnessed the signing with Indonesian President Susilo Bambang Yudhoyono on the sidelines of the annual World Islamic Economic Forum, aimed at boosting cooperation among Muslim communities.

"When the entire project is completed in 2014, TRANSPEN pipeline will divert about 20 per cent of oil transiting through Straits of Malacca, proportionately easing the congestion in the Straits," Trans-Peninsula said in a statement.

Half of the world's oil shipments currently pass through the 960-kilometre (595-mile) Strait of Malacca, the busiest seaway in the world, which links the Indian Ocean and the South China Sea.

The Strait was notorious for pirate attacks but security officials, who fear the economic and strategic ramifications of any disruption to the vital maritime traffic, say security has vastly improved.

"Everyone can use the pipeline. It is to direct traffic away from the international waterway of the Straits of Malacca," Rahim Kamil Sulaiman, chairman of Trans-Peninsula Petroleum, told a news conference.

In its statement, Trans-Peninsula said the pipeline, about 300 kilometres in length, will cut across Malaysia's northern states of Kedah, Perak and Kelantan. It will have support facilities for deep-draught tankers at either end.

Rahim said the oil will come mainly from the Middle East but also from Africa for "the East Asian oil market".

He said "we have made known our projects to both China and Japan, especially China".

Government data in China say the country's crude oil consumption rose 7.1 per cent year-on-year in 2006.

Phase one of the oil pipeline project is expected to begin in 2008 after land acquisition and environmental and social impact assessments, Trans-Peninsula Petroleum said.

Plans call for an initial 48-inch (122-centimetre) pipeline with a throughput of two million barrels a day and storage capacity of 60 million barrels. It would be operational by 2011, the company said.

After four to five years of operation, capacity would be upgraded to a maximum of 180 million barrels of storage and six million barrels per day throughput, it said.

Deputy Prime Minister Najib Razak has said the proposed project was intended to reduce transport costs and security risks for tankers on the Malacca Strait.

"It's a very expensive solution to a problem that doesn't seem that severe, frankly," said Jason Feer, of energy market analysts Argus Media Ltd in Singapore.

While traders would save three days' sailing time, the logistics involved and the cost of using the pipeline would leave "a pretty marginal benefit," he said.

"In the end, the big test will be, will banks loan them money to build this?" Feer said.



Link may expire:

http://www.bangkokpost.com/breaking_news/breakingnews.php?id=119055

[GWR]

http://www.asiasentinel.com/index.php?option=com_content&task=view&id=558&Itemid=31

Malaysia’s Pipeline Dreams
Ioannis Gatsiounis
29 June 2007
Is an oil hub and pipeline across the Malaysian Peninsula just more megaproject nonsense or geopolitical maneuvering?

Despite the departure of Prime Minister Mahathir Mohamad three years ago, and with him some of the more grandiose dreams of Malaysian development, the country’s fondness for megaprojects continues with its proposed northern oil hub.

At a cost of US$7 billion the project will be pricier than some of the more controversial ones pushed by Mathathir, including the Kuala Lumpur International Airport ($3.5 billion) and Putrajaya ($5.26 billion), the ghostly federal administrative territory 25 km from Kuala Lumpur built to house the government in splendid isolation.

Government officials say the grand oil hub will address what those projects haven’t – the nation’s nagging rural-urban economic divide. It will include two refineries and a 188-mile pipeline that will slice through the underdeveloped northern states of Kedah, Perak and Kelantan, and may involve laying down three pipelines. It is expected to create thousands of jobs upon completion in 2014.

The pipeline would transport oil mainly from the Middle East en route to East Asia and bypass the congested Malacca Straits to the south, through which a third of the world’s oil passes. Planners estimate it would be able to handle 6 million barrels a day, or half of the 12 million barrels currently being shipped through the Straits.

But doubts are being raised about whether the hub will save either time or money. The idea of such a pipeline across the isthmus has been repeatedly raised – and abandoned – by Thailand’s government, for instance, which for decades has talked about a similar pipeline across the Kra peninsula, only to give it up as both costly and impractical. Analysts say handling and refining expenses could actually exceed the US$67, 000 per day spent to ship by tanker from the Persian Gulf around the Straits to East Asia.

Use of the pipeline would require docking, unloading, transporting and reloading a second ship on the receiving end. Refining would take longer. By some estimates the process could take six days.

The Malaysian government has given the project its blessing while at the same time distancing itself, stressing that it is an entirely private-sector initiative. Petronas, the national oil company, is not involved. Rather a relatively unknown company, Trans-Peninsula Petroleum, is expected to construct the pipeline along with Ranhill Engineers and Constructors and Indonesia's PT Tripatra. Trans-Peninsula has also recruited Saudi Arabia's Al-Banader International to provide oil.

A closer look reveals that Trans-Peninsula was founded by Petronas executives. Members of Prime Minister Abdullah Badawi’s long-ruling United Malay National Organization (UMNO) are major stakeholders in Ranhill, whose chairman, Sallehuddin Mohamed, for instance, is a former chief secretary in the government. Meanwhile, the refinery in Yan, Kedah, is to be built by SKS Development and the National Iranian Oil Company. SKS is controlled by entrepreneur Syed Mokhtar Albukhary, one of Malaysia’s richest businessmen, who has long maintained close government ties.

A general manager with SKS said unequivocally that the refinery has no connection with the pipeline, though another general manager with SKS said on the condition of anonymity that “at the moment we are not talking with the pipeline promoters…though we are looking into the feasibility.” United Engineers Malaysia, which has submitted plans to assist with piping the project, is wholly owned by Khazanah National, the government’s investment arm.

Private sector-government synergy has been known to abet high-level corruption in Malaysia, and this may be one reason the government is publicly distancing itself from the project. Another reason might be to downplay the geopolitical implications of the project at a time when Malaysia has quietly gone about strengthening ties with some of the world’s leading human rights abusers, including Iran and Russia, not to mention Chad and Sudan, where Petronas has been investing heavily.

Last November Foreign Minister Syed Hamid Albar said Malaysia and Iran held "identical views" on many international issues, and agreed during a visit to Tehran to develop closer ties in various fields, including oil and gas. Some analysts say the pipeline is intended in part to assist Tehran in delivering oil to East Asia, should Iran be slapped with international sanctions – in which case, Tehran fears, Singapore, a major US ally, would prevent Iran from shipping oil through the Straits. Syed Mochtar’s SKS recently cemented a $16 billion deal with Iran to develop two gas fields in southern Iran, and the National Iranian Oil Company will be Syed Mokhtar's partner in the project, with a 30 percent stake, according to the Edge Weekly.

China is also said to fear a shutdown of the straits, with 80 percent of its oil supply passing through the narrow waterway. Anticipation of a row over Taiwan is thought to heighten those fears, as is China’s lack of naval resources required to defend its sea lanes at a time when oil demand is rising, says Ian Storey, a researcher specializing in Southeast Asia’s relations with external powers at the Institute for Southeast Asian Studies, Singapore.

The pipeline may also abet Burma’s military regime in transporting oil to China, said a researcher with the Defense Ministry. The researcher said waters off both coasts are shallow and will require new mooring facilities. But as Burma is close to Malaysia, it could be feasible to use feeder ships.

To be economically viable the project would depend on large foreign investment and rising oil demand in East Asia. Toward that end Trans-Peninsula Petroleum's chairman, Rahim Kamil Sulaiman, said his company is courting offers from major Middle East oil producers, Islamic funds and large consumers in East Asia. But while China’s oil demand is growing, demand in the rest of the region is tapering off amid rising oil prices.

But then, economics appears to be just one part of this equation.

[GWR]

Scrapping pipeline won’t affect firms

PETALING JAYA: The recent report that the proposed oil pipeline from Yan in Kedah to Bachok in Kelantan is to be scrapped is unlikely to significantly affect the oil and gas companies linked to the project.

Public listed Ranhill Bhd, Muhibbah Engineering Bhd, Nam Fatt Corp Bhd and Kencana Petroleum Bhd were previously said to be involved in the project.

An analyst at a local brokerage said Ranhill's involvement was at a preliminary stage as it had only signed an alliance agreement with Trans-Peninsular Pipeline Sdn Bhd.

“I don't think people would have factored the project into its order book,” he said, adding that the project's contribution to the other companies' respective order books would have been insignificant.

OSK Investment Bank, in a report yesterday, said the cancellation “did not come as a surprise” given the costly price tag for the development.

The research outfit said it had not factored in the project for the oil and gas companies under its coverage.

“Going forward, the local oil and gas sector will still be buoyed by continuous news flow, particularly from the deepwater developments in the domestic front as well as oil and gas hotspots overseas,” it said.

OSK noted that many oil and gas companies were still carrying high levels of order books, which it expects to be constantly topped up.

“After the recent sell-down in the market, the valuations for most of the oil and gas counters under our coverage appear very attractive, based on our sector-wide fundamental multiple of 16 times,” OSK said, adding that its top picks were Dialog Group Bhd and Tanjung Offshore Bhd.
http://biz.thestar.com.my/news/story.asp?file=/2008/3/25/business/20739226&sec=business