Indonesia Bakrie wins M'sian deal

The Brunei Times, 27-May-07

Kuala Lumpur (Reuters): Indonesia's PT Bakrie & Brothers Tbk has won a contract to supply steel pipes for the development of a US$7 billion crude oil pipeline across the northern part of peninsular Malaysia, a source familiar with the plan said yesterday.

Bakrie, a diversified company controlled by the family of Indonesian chief social welfare minister Aburizal Bakrie, is part of a consortium that will build the 320-km pipeline, providing a link between Middle East producers and east Asian consumers. The government earlier this month approved the project which includes a new refinery at its western end and huge storage tanks for use by Asian nations. Unlisted local firm Trans-Peninsula Petroleum is the project developer while the other partners are Malaysian engineer Ranhill Bhd, Saudi Arabia's Al-Banader International Group and Indonesia's PT Tripatra, a unit of integrated energy group PT Indika Inti Energi. Tripatra will manage the project.

Further details are expected to be announced tomorrow. Trans-Peninsula Petroleum will invest US$7 billion over eight years to build the pipeline, helping ships avoid the busy Malacca Strait, conduit for over a quarter of the world's seaborne crude. The first phase, costing US$2 billion, could transport two million barrels per day, the source said, which would rank it among the largest oil pipelines in the world. The source said the equity structure has not been finalised.

Construction of the pipeline is expected to begin next year, the source said, adding that project funding plans include possible listing and tapping local and offshore debt markets. Oil tankers currently take Middle East crude through the Malacca Strait and around Singapore before sailing to ports in Japan, China, and South Korea.

The pipeline would stretch from the west coast town of Yan, which the government has designated a petroleum development zone, to the small fishing port of Bachok in the east.