Published August 17, 2009

Oil pipeline, storage project to cost RM23b

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(KUALA LUMPUR) Plans for a mammoth oil pipeline and storage facilities across northern Peninsular Malaysia have grown in scale, says a report in Malaysia's Business Times.

Assay Petroleum Sdn Bhd executive director Syed Izhar Al-Idrus said that the entire project will cost close to RM23 billion (S$9.43 billion) instead of the RM7 billion targeted by an earlier project promoter.

He said work on the project, which will essentially pipe oil from tankers berthed off the west coast to several storage facilities and subsequently the east coast, will start by 2011.

The project seeks to significantly cut oil transportation time from the West to the Far and North-East by making it unnecessary for tankers to sail southwards before entering the South China Sea.

Syed Izhar said the first phase, which is expected to take until 2014, will cost about RM10 billion.

'Then we will move into the second phase, which will cost another RM12 billion. The total project when completed would come to about RM23 billion,' he told reporters on Friday.



Assay was supposed to sign a shareholders' agreement with China Oceanwide Holdings Group Co Ltd and simultaneously launch the Oil Capital project. Syed Izhar said the signing and project launch were postponed at the last minute as Prime Minister Najib Razak was unable to attend. The signing ceremony will now be held after Hari Raya next month.

Syed Izhar said the project will involve laying a pipeline some 300km across Kedah, Perak and Kelantan: From Yan in Kedah to Tumpat in Kelantan. 'In between, we will build storage facilities, with one each in the three states.

The total capacity for these storage facilities is estimated to be about 122 million barrels of oil, he said.

He dismissed suggestions that Assay's project was a revival of the previous US$7 billion trans-peninsula pipeline mooted by Trans-Peninsula Petroleum Sdn Bhd. 'The project and promoter no longer exist. We are a separate entity and our project is known as Oil Capital.'