Malaysian oil plan gets partners

The deals were witnessed by the leaders of Malaysia and Indonesia

The Malaysian company with ambitious plans for a $7bn (£3.5bn) oil pipeline has signed deals with Indonesian and Saudi Arabian partners.

Trans-Peninsula Petroleum plans to build a 193 mile (310km) pipeline across Northern Malaysia.

The pipeline would bypass the Malacca Strait, allowing oil tankers to be loaded with crude away from the busy and often dangerous waterway.

Many similar projects have failed in the past.

Trans-Peninsula Petroleum said that it hoped Monday's deals would help to reassure any sceptics.

"We wouldn't be here today, we wouldn't have the support of the Saudi partners, if this project was not feasible or this project cannot be financed," Trans-Peninsula Petroleum's chairman Rahim Kamil Sulaiman said.

The company's partners are Saudi Arabia's Al-Banader International and the Indonesian steel pipeline maker, PT Bakrie & Brothers.

Notorious passage

The pipeline plans to run across Northern Malaysia, allowing Middle Eastern oil to be refined in Kedah on the north-western coast, piped to Kelantan on the eastern coast, where it would be shipped to Japan, China and South Korea.

Should the project be completed, then it would divert about 30% of the oil currently that goes through the Malacca Strait.

About half of the world's crude oil is shipped through the Malacca Strait.

The busy waterway is notorious for robberies and hijackings, although they have fallen in frequency since Malaysia, Indonesia and Singapore increased patrols in 2005.

Trans-Peninsula Petroleum signed up its partners on the sidelines of the World Islamic Economic Forum in Kuala Lumpur.

Earlier in the day, Trans-Peninsula also signed deals with Malaysia's Ranhill Engineers and Constructors and Indonesia's PT Tripatra for the design and construction of the pipeline.