Experts cautious on Malaysian oil pipeline
Thursday, 14 June 2007
KUALA LUMPUR, June 13 (AFP): Oil industry players have given only cautious approval to Malaysia's multi-billion-dollar northern pipeline project, citing slowing oil demand in the Asian region and cost concerns.
The owner of the project has said it will cost seven billion dollars over seven years to build, with the aim of transporting Middle East oil to East Asia by diverting it from the congested Malacca Strait.
"It saves you some money but it also costs a lot to build the pipeline," the chairman of the Asia Oil and Gas Conference, Fereidun Fesharaki, told AFP on the sidelines of the meeting, which has just been completed.
"Studies should be done to see if it is really economical," he said.
The project's owner, Malaysian firm Trans-Peninsula Petroleum, last month said the 300-kilometre (188-mile) pipeline would cut across the north of Malaysia's peninsula with facilities for storage and transit of crude oil on both coasts.
The oil will come mainly from the Middle East and also Africa for the East Asian oil market, especially oil-hungry China, the company said.
However, Fesharaki, an expert on Asia-Pacific energy markets and a former energy adviser to Iran's prime minister, downplayed rising energy demand in Asia.
With the exception of China, demand for oil in the rest of the region is slowing because of higher prices, he said.
"The pipeline assumes that demand will explode, but demand will not explode. That's the real story," he added.
The pipeline development will be complemented by the construction of two refineries in northern Kedah state on Malaysia's west coast, according to the state's chief minister.
Officials from Iran's state oil company said during the oil and gas conference that the firm would invest in the construction of one of the refineries.
They will also put money into a separate pipeline to transport Iranian- supplied crude from ships berthed in deeper waters off Malaysia's west coast to the refinery.
The owner of the project has said it will cost seven billion dollars over seven years to build, with the aim of transporting Middle East oil to East Asia by diverting it from the congested Malacca Strait.
"It saves you some money but it also costs a lot to build the pipeline," the chairman of the Asia Oil and Gas Conference, Fereidun Fesharaki, told AFP on the sidelines of the meeting, which has just been completed.
"Studies should be done to see if it is really economical," he said.
The project's owner, Malaysian firm Trans-Peninsula Petroleum, last month said the 300-kilometre (188-mile) pipeline would cut across the north of Malaysia's peninsula with facilities for storage and transit of crude oil on both coasts.
The oil will come mainly from the Middle East and also Africa for the East Asian oil market, especially oil-hungry China, the company said.
However, Fesharaki, an expert on Asia-Pacific energy markets and a former energy adviser to Iran's prime minister, downplayed rising energy demand in Asia.
With the exception of China, demand for oil in the rest of the region is slowing because of higher prices, he said.
"The pipeline assumes that demand will explode, but demand will not explode. That's the real story," he added.
The pipeline development will be complemented by the construction of two refineries in northern Kedah state on Malaysia's west coast, according to the state's chief minister.
Officials from Iran's state oil company said during the oil and gas conference that the firm would invest in the construction of one of the refineries.
They will also put money into a separate pipeline to transport Iranian- supplied crude from ships berthed in deeper waters off Malaysia's west coast to the refinery.