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Petronas sees delays in Malaysia-Thai gas project
KUALA LUMPUR, April 16 (Reuters) - Malaysia's state oil firm Petroliam Nasional (Petronas) [PETR.UL] said on Monday a natural gas project in Malaysia-Thailand's joint development area is facing delays because of Thai environmental concerns.

Petronas and Triton Energy Ltd's (NYSE:OIL - news) Thailand unit are contractors for the $800 million Cakerawala gas field project, which includes a 360 kilometre (225 mile) gas pipeline from Songkhla in Thailand to Kedah state in northern Malaysia.

The gas will be sold on an equal basis to Petronas and Petroleum Authority of Thailand (PTT) with delivery expected to start by June 2002 at an initial rate of 390 standard million cubic feet per day for 20 years.

But while development of the offshore field is on schedule, construction of the pipeline from Songkhla has run into delays after Thai authorities rejected studies on the project's environmental impact.

"There will be a delay and we are doing our best together with PTT to see whether the approval from Thai authorities can be given as quickly as possible," said Petronas president and chief executive officer Hassan Marican.

"At the same time, Petronas is looking into other options to bring back this gas to Malaysia."

Petronas may use its offshore evacuation system to deliver the gas to Malaysia, Hassan said.

"We are taking very urgent steps because the delay in the implementation of the onshore pipeline in Thailand will have an impact on supply and demand situation in late 2002 and early 2003," he said.

Petronas's 20-year agreement to buy $4 billion worth of natural gas from Conoco-operated (NYSE:COCa - news) fields in West Natuna in Indonesia from August 2002 will also help ease supply shortages caused by delays in the Malaysia-Thai project, Hassan said.

The offshore natural gas block is on the east coast of Thailand and Malaysia and the joint development area covering 7.250 square km in the Gulf of Thailand has a proven and probable gas reserve of about 9.0 trillion cubic feet.

Officials have estimated that the gas project would generate total revenue of about $7.6 billion, of which $3 billion would be shared by the governments of Thailand and Malaysia.

Go LONG!
Mike