Monday, May 28, 2007

Trans-Peninsula Pipeline

Sometimes, you just have to give it to them. Our government seems to have come up with a way to speed up delivery of petrol to China. The plan calls for an oil pipeline across our northern states of Kedah and Kelantan. This will affectively bypass the Straits of Malacca. This project just sounds good in so many ways.

Firstly, this pipeline interesting because the project doesn't just involve a simple pipeline. It also comes with refinery services. We've already got some infrastructure set up in Kedah for refining anyway. This will just result in better usage for the facilities and increased income.

Secondly, they've signed up a Saudi oil company to provide us with crude oil, which will be refined in Kedah. Then, the oil can be piped over to Kelantan and from there, shipped off to China, Japan and Korea. Sweet. So, we've also set ourselves up to provide a service on top of the transportation benefits.

Thirdly, the tankers wouldn't need to travel through the Straits, which were classified as a warzone not too long ago, due to it's piracy problems. This will result in a short-cut and short-cuts are good for business. Shorter times just mean that more oil can be traded, which means more profits.

The biggest issue facing the pipeline would be the terrain. As any Malaysian who knows his geography will tell you, it's not easy to cross the peninsula along the east-west direction. The centre of the peninsula is mountainous. That's why our rail system skirts down to Johor and up again. That's why there's only one main highway that links the two states.

The next issue would be environmental. The area across the two states is pretty much virgin rain forests. So, there are a lot of animals and plants that will have to make way for this pipeline. Since we don't have very strong environmental groups in Malaysia, this wouldn't pose much of a problem to the consortium.

The final issue would be political. Kelantan is controled by the opposition, PAS. So, the federal government will have to cut a deal with the opposition controlled state. As this project is supposed to start in 2008 and complete in 2014, who knows what will happen in between. We could have a change in governments and things may change.

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