Malaysian pipeline, refinery complex proposed

A proposed refinery complex and pipeline across northern Malaysia are at the discussion stage, according to a senior Malaysian official.

Eric Watkins
Senior Correspondent

LOS ANGELES, Apr. 17 -- A proposed refinery complex and pipeline across northern Malaysia are at the discussion stage, according to a senior Malaysian official. But reports suggest that the project, which purportedly aims to safeguard oil shipments against terrorism and piracy in the Malacca Straits, may not be needed.

Malaysian Deputy Prime Minister Datuk Seri Najib Tun Abdul Razak said the oil and gas pipeline project between the country's northern provinces of Kedah and Kelantan remains at the proposal stage.

"There are proposals to have a refinery and a pipeline that will take it across. As far as I know, it is still at a discussion stage. Nothing has been finalized," Najib said.

"It's primarily for commercial purposes because they think they can transport the oil at a lower cost and also avoid some of the risks relating to heavy traffic at the Straits of Malacca," Najib said.

Apart from the 320-km pipeline, plans call for a 200,000 b/d coastal refinery to be constructed by a joint venture of local firm SKS Development Sdn. Bhd. and National Iranian Oil Co. (NIOC).

On Apr. 11, regional government officials said construction was due to begin by August on a refinery and the oil pipeline across northern Malaysia, offering companies the chance to avoid the increasingly congested Malacca Straits.

They said oil could be offloaded on peninsular Malaysia's west coast, piped across the country's northern regions, and then reloaded onto tankers for onward passage to Far Eastern markets, Japan and China in particular.

The Malaysian officials said about 70% of the $14.5 billion cost would be foreign investment, with a large proportion coming from NIOC and unnamed Saudi and Chinese investors.

Analysts reportedly believe the pipeline project is politically motivated, as it would enable shippers and purchasers to avoid Singapore, a US ally, if relations between the US and Iran deteriorate further.

Piracy down
Adm. Timothy Keating, the top US commander in the Pacific, said Apr. 16 that countries along the Malacca Strait have vastly improved security in the strategic shipping route over the last 5 years.

Separately, an Apr. 17 report issued by Singapore's Nanyang Technological University said piracy and armed robbery attacks against ships in Southeast Asia have been reduced greatly, and the overall number of attacks in the region is on a downward trend.

The number of incidents for the first quarter is the lowest in the past 5 years. There were 12 armed robbery and piracy incidents reported in the first quarter, 10 of which were actual attacks and two attempted raids.

The report said more than half of the attacks during the period were carried out against tankers, and most took place within Indonesian waters, including the vicinity of the Balongan oil export terminal east of Jakarta.

"The Indonesian ports and anchorages remained the regional hotspots for armed robbery and piracy activities," the Nanyang report said.

Contact Eric Watkins at hippalus@yahoo.com.

More in Pipelines