Sat, Oct 27, 2001 page19

• Gas pipelines menace Thai way of life

  A planned US$500 million pipeline from the South China Sea across Thailand has aroused so much opposition that Malaysia is considering another route

  • By Wayne Arnold / NY TIMES NEWS SERVICE BAN TALING CHAN
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  If the Thai government gets its way, a new pipeline will soon appear on the white sand beach here, carrying natural gas from beneath the South China Sea across Thailand to Malaysia. It will bring energy for Southeast Asia and thousands of new industrial jobs for southern Thailand.

  That is what Ariya Maday is afraid of. "We want our way of life," said Ariya, one of roughly 5,500 Muslim villagers who live in the Taling Chan district. "We don't want to change and work in industry."

  

  If the Thai government gets its way, a new pipeline will soon appear on the white sand beach of Ban Taling Chan, carrying natural gas from beneath the South China Sea across Thailand to Malaysia. Above is a gas platform in the South China Sea near Thailand.

  PHOTO: NY TIMES

  To many traditional Muslims here, the project represents the intrusion of a kind of globalization they have sought to keep at bay. It is the latest in a growing number of disputes that have inflamed conflicts between discontented local residents of villages scattered across Southeast Asia and government officials bent on modernizing their countries.

  To block construction, the villagers here have put up a makeshift stockade where they convene for lectures on energy, pollution and globalization. The teach-ins have worked so far: The US$500 million Trans Thai-Malaysia Pipeline has been delayed so long that Malaysian officials are considering a new route that would bypass Thailand.

  That might help Taling Chan delay the wider effects of industrial development. But it would also set back a project aimed at helping the region better compete in the world economy. The planned pipeline is part of grid of cross-border gas connections that the Association of Southeast Asian Nations, (ASEAN), envisions as a way to tie its economies more closely together.

  Conceived in 1990, the idea of a network of pipelines moving natural gas from sources in Malaysia, Indonesia and elsewhere to other countries of Southeast Asia gained new impetus during the surge in oil prices last year. Officials hope it will reduce the region's reliance on Middle East oil and promote the use of the more environmentally friendly natural gas.

  "I see it as an imperative," said Leon Codron, chief executive of Singapore Petroleum. "Globalization has to mean a better life for everyone. That can only come if there's energy available."

  But to villagers like Ariya, with little hope for middle-class status, globalization mostly seems to benefit city people at their expense. For ASEAN's leaders, the standoff at Ban Taling Chan typifies the challenges they face.

  China's rise as a rival has wakened ASEAN nations to the need to erase economic boundaries. But national interests and local disputes -- which include separatist movements and piracy -- hinder the EU-style cooperation needed to make projects the gas grid work.

  "It looks like something that would be very powerful in terms of regional economic development," said Patrick Meyer, president of Conoco Indonesia. "But when you get close to it and you start looking at it from whichever country you happen to be in, it's more complicated than that."

  Three pipelines

  There are already three cross-border pipelines. The first was built from Malaysia to Singapore in 1992. In 1998, Unocal and TotalFinaElf of France laid one from fields off the Burmese coast 650km across rebel territory and a national forest to Thailand.

  This year, SembCorp Gas of Singapore began receiving gas through a US$400 million pipeline from Indonesian fields operated by Conoco, Gulf Oil and Premier Oil of Britain nearly 640km away in the South China Sea.

  When gas was discovered in Southeast Asia in the 1960s, it was still used mainly for heating -- and of little use in the tropics. "I can remember when you'd ask customers if they wanted to buy natural gas and they'd say, `What's natural gas?'" said Thomas E. Fisher, senior vice president for commercial affairs at Unocal.

  The oil crisis of 1973 to 1974 changed that. New, more efficient gas-fired generators made natural gas not only a cleaner alternative to oil and coal for power plants but often cheaper, too.

  Southeast Asia now uses gas to generate about 40 percent of its electricity, more than any other fuel. Unocal counts on Southeast Asian gas for one third of its revenue. Conoco is also benefiting. "We had been a small part of Conoco's profitability for many years," Meyer said. "That's changing quite quickly."

  Even so, gas use varies widely. While the Philippines uses almost none, Thailand derives 70 percent of its electricity from gas and fears a shortage.

  A Catch-22 hinders new production: Companies will not explore gas fields until they have lined up buyers; buyers will not commit until they are guaranteed supply. As a result, most gas in Southeast Asia is supplied under 25-to-30-year contracts. In the US, gas contracts typically span a year or less.

  Oil companies support the gas grid because it would enable them to sell gas from one field to several buyers. Buyers favor a gas grid because they could choose from several sellers. Governments like the idea because it would reduce the risk that disturbances elsewhere would leave them powerless.

  But the biggest beneficiary, Indonesia, is arguably the least able to take part. Indonesia is Southeast Asia's largest natural gas producer, earning US$12 billion a year in revenue, most from shipping liquefied natural gas to Japan and South Korea.

  But financing for new pipelines is not easy in Indonesia. A lack of capital, bankers say, is holding up a 370km pipeline to Singapore from fields operated by Devon Energy and Gulf Oil on the big Indonesian island of Sumatra. The state-owned oil company Pertamina has already signed a contract to start delivering by 2003, but its gas subsidiary, Perusahaan Gas Negara, is still trying to raise the US$300 million bankers say it needs. Pertamina did not respond to requests for an interview.

  A similar problem faces Malaysia's state-owned Petroliam Nasional, or Petronas, in Thailand. Thailand and Malaysia have been planning some sort of petroleum project along their border since 1979, when they agreed to settle a dispute over offshore drilling rights by exploring the area together. In 1996, the Petroleum Authority of Thailand, or PTT, and Petronas agreed to buy gas together from their joint development area and pipe it to the province where Ariya lives. The prospect of a steady supply of gas prompted the Thais to draft plans for the industrial transformation of the area.

  Initially, the gas would go just to Malaysia; Thailand would start taking its share of the gas in five years. Petronas has agreed to start paying for gas from the joint development area next July whether it can use the gas or not.

  Searching for money

  But executives of the joint venture are still searching for the roughly US$450 million needed to build the pipeline. The project has been held up since March both by the local protests and by Thai regulators' repeated rejection of the company's environmental impact assessment.

  Yet the problems are mild compared to what could await other pipelines envisioned by the grid's planners. One line, for example, would extend from Malaysia to Aceh province of Indonesia, where attacks earlier this year related to a simmering Islamic separatist war forced ExxonMobil to pull out while troops restored order. Another would connect Malaysia to the Philippines across waters plied by Muslim rebels who officials suspect have links to Osama bin Laden. The pipeline from Sumatra to Singapore crosses a province where locals demanding a greater share of oil proceeds have begun systematically pillaging company equipment.

  Public opposition to projects like the Thai-Malay pipeline was never even taken into account until 1997, when Thailand adopted a new constitution that required consultation with locals before undertaking major infrastructure projects.

  PTT responded by launching a public relations campaign to allay villagers' fears and promote the jobs and shopping malls the project would bring. The company doled out rice and sugar, clocks for the mosques and money for schools, villagers say. The company did not respond to numerous requests for an interview.

  The villagers, who fish, farm or raise songbirds, were unmoved. In addition to the risk of gas leaks or explosions, they worry about impurities such as toxic mercury extracted by the gas separation plant affecting their air and water.

  The precedent is not encouraging. Twenty years ago, the company built a gas separation plant where pipelines landed on the coast just south of Bangkok.

  With a ready supply of energy and gas by-products nearby, the sleepy fishing community became a polluted snarl of petrochemical plants, steel mills and auto factories.

  "I thought God had made nature the same everywhere," said Arisa Hmanhla, one of many villagers who ventured north to see the effects of this development . "But the water was dirty, the soil was dirty and I saw oil in the seawater."

  Arisa and her neighbors also fear that new jobs will attract outsiders.

  Noisy protests shut down the first public hearing on the pipeline in July last year. At a second hearing last October, clashes broke out when police officers, wielding batons, refused to let protesting villagers inside.

  A spokesman for the consortium, Amnuay Lymai, said the pipeline and gas separation plant would have almost no environmental impact on the area. As for determining the effect of subsequent industrialization, that is not its responsibility, he said. Thailand's environmental office has already approved the gas separation plant, and is in the process of approving the pipeline, which Amnuay said is finally expected this month.

  But even then, he said, the consortium will have to win the approval of Taling Chan's district committee. That will be tough. "We will not allow this project," said Arisa. "We will fight in every way. We're not afraid of death."

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