REC entered into a master alliance agreement with Trans-Peninsula Petroleum Sdn. Bhd. (Transpen), also of Kuala Lumpur, and Tripatra Engineers & Consultants of Jakarta for the Malaysian Trans-Peninsula Pipeline.

Ranhill said Transpen was granted exclusive rights by the Malaysian government to develop the project, which will receive oil from carriers off Western Peninsular Malaysia and store, transport, and deliver oil to carriers off Eastern Peninsular Malaysia.

Work on the pipeline is slated to start in 2008 and be completed in 2014, according to Transpen Chairman Rahim Kamil Sulaiman, who told a news conference that oil would be loaded onto tankers bound for Japan, China, and South Korea, bypassing Singapore and the Malacca Strait, which currently supports transportation of about 50% of the world"s oil.

Sulaiman"s statement confirmed reports in early May that Malaysia had agreed to build the pipeline from northwestern Kedah state, across Perak state, to northeastern Kelantan state which fronts the South China Sea. At the time Prime Minister Datuk Seri Abdullah Ahmad Badawi said 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).

The Ranhill statement did not mention refineries. However, Mahdzir Khalid, the chief minister for Kedah state, through which the line will extend, told reporters that two refineries with a combined refining capacity of 450,000 b/d will be built in Kedah by 2010. He said Malaysia"s SKS Ventures and Merapoh Resources Corp. would reveal arrangements for the refineries in August.

PIN/OGJ.COM