Thai-Malaysia gas pipeline project delayed again

The Trans Thai-Malaysia (TTM) gas pipeline project encounters another delay on request from the Thai government to further probe the environmental aspect of the mega project. Petroliam Nasional (Petronas) president and CEO Tan Sri Mohd Hassan Marican said Thailand has requested for more time and thus, the implementation of the project has to be put on hold.
Hassan said Petronas may opt for an alternative plan if the time to approve the TTM project takes too long as this may affect that of the Trans Asian Gas Pipeline (TAGP). "There is always an alternative but we do not want to rush into it," he said after officiating at the Sixth SPE International Conference on Health, Safety and Environment in Oil and Gas Exploration industry in Kuala Lumpur.

Last December, the Thai authorities approved the project, which involves constructing a 336km gas pipeline and a gas separation plant between the Gulf of Thailand and Malaysia. The construction was supposed to commence early this year. However, it wasdelayed following claims by the locals in Songkhla, a province in southern Thailand, that their livelihood would be affected by the project.
The TTM project, which was earlier scheduled for completion and operation in the middle of this year, is part of the RM 22.8 bn TAGP. Several cross-border gas pipelines in the region have been completed or firmed up with necessary agreements.
The TTM project, worth 20.80 bn baht will be operated by Trans-Thai Malaysia, a joint venture between Petronas and a Thai counterpart. The main section of the pipeline, carrying gas from the joint development area in the Gulf of Thailand to the separation plant, has a capacity of just over 1 bn cfpd. Both Thailand and Malaysia will buy gas from the project although Malaysia will take all of its production for the first five years.

The pipelines, directly or closely related to the TAGP, include the West Natuna-Singapore Pipeline which was completed in January 2001, South Sumatra (Gressik-Singapore Pipeline -- gas sales agreement signed in February 2001) and West Natuna-Duyong of Malaysia (gas sales and purchase agreements signed in March 2001).
Early, Petronas also signed a Memorandum of Understanding (MoU) with Pertamina of Indonesia and ExxonMobil to look into the possibility of landing gas from East Natuna in the future. Hassan said that the company wants to see the outcome of the study first before proceeding with the next step. "Although Natuna has the largest gas reserves in Asia, the quality, especially at the East Natuna, is still questionable. There are some technical problems," he said.

On the gas supply agreement with Pertamina, Hassan said the discussion is ongoing. Petronas, in December last year, concluded an agreement with Pertamina and is currently holding discussions to conclude other agreements. Pertamina was ready to give up a 13 % stake in Natuna D-Alpha natural gas field to Petronas.
Currently, ExxonMobil has a 76 % stake in the D-Alpha natural gas block in the South China Sea, while Pertamina has 24 %. "I think Pertamina is ready to give up (part of) its share to Petronas in return if they (Petronas) buy the natural gas from D-Alpha gas field," Pertamina's upstream director Iin Arifin Takhyan was reported as saying.
As to whether Pertamina was ready to give up a 13 % stake, Takhyan said: "Yes. We signed a memorandum of understanding with Petronas early to allow them to access the data and other information from the D-Alpha block," he said. "Petronas said they were keen to buy 1 bn cfpd from Natuna D-Alpha. They wanted to participate in upstream there. We are ready to respond to that," Arifin said.

Meanwhile, in his keynote address at the conference, Hassan said Malaysia has achieved a high standard of health, safety and environment (HSE) for its oil and gas industry. "We will continue to require such a high standard," he said. The oil and gas industry has always been a "punching bag" when it comes to HSE and sustainable development issues. "I dare say that there are many others who are less efficient and less concerned about these issues in their respective areas of operations," he said.
For that, Hassan suggested that all companies should comply with the international HSE level. "The compliance level is very high and not exclusive to big organisations only. Even small companies should comply with this," he added.