Roadshows Tipped to Sell Land Bridge Oil Project

The Energy Policy and Planning Office is expected to wrap up its feasibility study for the Land Bridge project, which would connect the Andaman Coast with the Gulf of Thailand, and forward it to the Energy Ministry next month.

Once the Cabinet approves the study, Energy Minister Pongsak Ruktapongpisal will hold overseas roadshows on the project.

The southern project was initiated during the administration of former prime minister Thaksin Shinawatra, which assigned several state agencies to conduct feasibility studies on the project before the responsibility was transferred to the Office of Transport and Traffic Policy and Planning, which conducted the study together with United Arab Emirates-based Dubai World.

The preliminary study by the Energy Policy and Planning Office calls for a 40-inch crude oil pipeline to run 200 kilometres beside the highway from Phang-Nga on the Andaman Coast to Nakhon Si Thammarat on the Gulf of Thailand. It could allegedly relay two million barrels of oil per day. A 10-million-barrel depot would be built at each end of the land bridge.

A ministry source said Japan and Korea, which import crude oil from the Middle East, are keen to invest in the oil reserve depots if Thailand grants them a long lease for the land. Both countries can use the land there as oil reserve bases, since they have limited areas in their own countries for new oil reserve bases.

What the Thai government has to do is to allow Korean and Japanese investors to rent space in the Land Bridge project for the construction of the pipeline and depots. The Thai side might convert its rental income into 20-30 per cent equity in their projects. This means the Thai government would not have to invest alone in the project, which would be a big burden.

"The problem now is how to gain support from the communities in the project area," the source said. The Pheu Thai-led government would face difficulties winning over communities in the South, which is a stronghold of the opposition Democrat Party, he added.

Pongsak said the Land Bridge project would help boost the economy. If it could become an oil transport hub, it would be a new source of revenue for Thailand. He plans to visit Korea, Japan, China - the oil importers - and the Middle East countries - the oil exporters. The Land Bridge project will shorten the time for crude oil deliveries and help ease traffic congestion in the Malacca Strait.

"This Energy Land Bride will bring benefits to Thailand in many ways in the future, such as related businesses like refineries and petrochemical plants, which will turn Thailand into the key petroleum trading hub in Asia," he said.

Suthep Liamsiricharoen, director-general of the Energy Policy and Planning Office, said oil transported via the Malacca Strait in Singapore was expected to jump to 25 million barrels per day in 20 years from 13-15 million today. It would reach the Strait's peak capacity of 17 million barrels per day in a couple of years. The Land Bridge Project would lend itself as the alternative to the Malacca Strait.

The project cost is estimated at US$1.3 billion but could rise to $5 billion if oil transportation via the project increased to 8 million barrels per day.

Investment in the project could be on a government-to-government basis but Thailand would hold only a minority stake of 20-30 per cent. But it would be cashless investment, as the government would rent the land for the pipelines and oil depots. It could also earn income by charging fees for using the pipelines for oil transport.