Eric Watkins
Senior Correspondent
LOS ANGELES, July 18-- Malaysian Prime Minister Abdullah Ahmad Badawi, apparently reversing his earlier decision, said Malaysia will examine the cost and environmental impact of a proposed multibillion dollar oil pipeline before approving the project.
Several companies have submitted proposals to construct a pipeline across the northern reaches of peninsular Malaysia aimed at avoiding the Malacca Strait for carrying supplies of Middle East oil to East Asia.
On completion in 2014, the pipeline is expected to divert about 20% of the oil currently transiting the strait, with most of the oil going to China and Japan.
However, Abdullah said the private initiatives would have to be studied carefully, as many factors are involved, such as the difficult task of laying a pipeline across the country's northern mountain range.
In particular, he said, the project "is expected to be difficult, and the cost involved is very high" and that "the cost difference between using the oil pipe and a crude carrier to transport the oil will also have to be considered."
Abdullah said Malaysia must conduct detailed studies because construction of marine facilities requires huge investments, and attention must be also given to environmental studies, including the risk of pollution due to possible leaks in pipe or storage tanks.
In late May, reports said Ranhill Engineers & Constructors had secured a contract for the design, engineering, procurement, construction, and testing of a 320-km west-east oil pipeline across Malaysia (OGJ Online, May 29, 2007).
In early May, Abdullah said Malaysia had agreed to build the 320-km oil pipeline from northwestern Kedah state, across Perak state, to northeastern Kelantan state, which fronts the South China Sea.
At the time, it was reported that the project would enable Middle Eastern shippers to reach East Asian markets without risking cargoes along the busy, pirate-prone Malacca Strait (OGJ Online, May 7, 2007).
Contact Eric Watkins at [email protected].