Malaysia set to be oil hub
Wednesday, 11 July 2007
KUALA LUMPUR, July 10 (Xinhua): Malaysia is to become a hub for oil trading, futures and securitization involving Islamic oil-structured financial derivatives in East Asia after a seven-billion US dollars Trans-Peninsular Oil Pipeline (TranPen) project kicks off, local media reported today.
With its storage facilities, the project will create a new and hitherto non-existent concept in East Asian oil market: commercial crude oil-in-place, said the New Straits Times.
"Producers will be able to store oil at TransPen, ranging from 30 to 90 days, paid by the net savings in logistics cost when the pipeline is fully operational," an industry observer said.
When compared to the current 12 million barrels per day (bpd) of oil transiting through the Straits of Malacca and growing to about 20 million bpd by 2020, the 30 days of storage in TransPen will be sufficient to justify an oil exchange for East Asia in Malaysia, he said.
Noting that Malaysia Bank Negara and a Saudi bank have signed an accord on commodity Murabahah, the observer said middle Eastern and Malaysian banks can capitalise from this arrangement to help realise the proposed oil-structured derivatives, since oil is a viable financial asset to facilitate liquidity management and investment.
With its storage facilities, the project will create a new and hitherto non-existent concept in East Asian oil market: commercial crude oil-in-place, said the New Straits Times.
"Producers will be able to store oil at TransPen, ranging from 30 to 90 days, paid by the net savings in logistics cost when the pipeline is fully operational," an industry observer said.
When compared to the current 12 million barrels per day (bpd) of oil transiting through the Straits of Malacca and growing to about 20 million bpd by 2020, the 30 days of storage in TransPen will be sufficient to justify an oil exchange for East Asia in Malaysia, he said.
Noting that Malaysia Bank Negara and a Saudi bank have signed an accord on commodity Murabahah, the observer said middle Eastern and Malaysian banks can capitalise from this arrangement to help realise the proposed oil-structured derivatives, since oil is a viable financial asset to facilitate liquidity management and investment.