Malaysia & Indonesia Build Oil Pipeline
Tuesday, 29 May, 2007 | 12:00 WIB

Tempo Interactive, Kuala Lumpur: Companies from Malaysia, Indonesia and Saudi Arabia signed an oil pipeline building contract worth US$7 billion or around Rp61.6 trillion in Malaysia for a seven year period, yesterday (28/5).

Malaysian Prime Minister, Abdullah Ahmad Baadawi, witnessed the signing of the contract along with Indonesian President Susilo Bambang Yudhoyono during the Islamic World’s Economic Forum in Kuala Lumpur.

The pipeline that crosses northern Malaysia will avoid the Malacca Straits and Singapore, the regular path of crude oil shipment from the Middle East to East Asia. The pipeline is able to pump two million barrels of oil a day and it is estimated that it will divert around 20 percent of the oil supply from the Malacca Straits.

Trans-Peninsula Petroleum Sdn. from Malaysia, the project owner, collaborated with Ranhill Engineers and Construction Sdn. from Malaysia and PT Tripatra from Indonesia in building this pipeline network.

Trans-Peninsula will also draw up a Memorandum of Understanding (MoU) with Bakrie and Brothers from Indonesia to provide the pipeline and with Al-Banader International Group from Saudi Arabia to procure the oil.

With the new pipeline network, crude oil shipped from the Middle East will be refined in the Kedah Southwest coast and be pumped along 300 kilometers to Kelantan in the Malaysian East coast. The oil can then be shipped by tanker ship to Japan, China and South Korea.

The pipeline construction will start next year. “This isn’t a political project, but rather commercial,” said Rahim Kamil Sulaiman, Chairman of Trans-Peninsula.

Half of the world’s oil shipment is now via the Malacca Strait. The strait, 960 kilometers long, becomes the busiest sea path that connects the Indian Ocean with the South China Sea.

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