Malacca Strait Pipeline Deals Signed

KUALA LUMPUR ~ Malaysian, Indonesian and Saudi Arabian firms signed agreements this week for the construction of a pipeline that aims to divert 20 percent of oil flowing through the strategic Malacca Strait, the project owner said.

Malaysia’s Trans-Peninsula Petroleum Sdn Bhd said it signed an agreement with Malaysia’s Ranhill Engineers and Constructors Sdn Bhd and Indonesia’s PT Tripatra to build the pipeline at an estimated cost of seven billion dollars over seven years.

Trans-Peninsula, the owner and promoter of the project, said it signed separate memoranda of understanding with Bakrie and Brothers of Indonesia to supply pipes, while Al-Banader International Group of Saudi Arabia will supply the oil.

Prime Minister Abdullah Ahmad Badawi announced the development last month, saying it would transport Middle East oil across the north of the Malaysian peninsula to East Asian countries.

Badawi witnessed the signing with President Susilo Bambang Yudhoyono on the sidelines of the annual World Islamic Economic Forum, aimed at boosting cooperation among Muslim communities.

“When the entire project is completed in 2014, TRANSPEN pipeline will divert about 20 percent of oil transiting through Straits of Malacca, proportionately easing the congestion in the Straits,” Trans-Peninsula said in a statement on Monday.

Half of the world’s oil shipments currently pass through the 960-kilometre Strait of Malacca, the busiest seaway in the world, which links the Indian Ocean and the South China Sea.

The Strait was notorious for pirate attacks but security officials, who fear the economic and strategic ramifications of any disruption to the vital maritime traffic, say security has vastly improved.

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