Deal off for Johor’s second largest reclamation project

KUALA LUMPUR: The fate of the Tanjung Piai petroleum hub and industrial park is now uncertain following the expiry of the binding term sheet for the Tanjung Piai reclamation works agreement on Thursday.

Benalec Holdings Bhd told Bursa Malaysia that 70% owned subsidiary Spektrum Kukuh Sdn Bhd’s deal with The State Secretary, Johor (Inc) and 1MY Strategic Oil Terminal Sdn Bhd, which was signed in March 2013, expired on June 11.

Without giving any reason, the civil engineering firm said the parties involved did not intend to pursue the finalisation of the agreement or extend the term sheet’s validity period any further. 

The plan was for Spektrum Kukuh Sdn Bhd to reclaim and sell about 1,000 acres off the coast of Tanjung Piai, Johor, for the purpose of constructing and operating a crude oil and petroleum storage facility together with a private jetty.

The Department of Environment (DoE) in January this year had approved the detailed environmental impact assessment (DEIA) report of this second largest reclamation project in Johor.

A Benalec press statement at the time said the proposed site of the island was naturally sheltered, with excellent anchorage area and was in close proximity to the Jurong Island Petroleum & Petrochemical Hub, thereby allowing an attractive and sizeable alternative site to existing and future operators seeking expansion in the oil and gas sector within the region.

StarBizWeek reported in January that AmResearch’s May Hoy Ken believed Benalec’s “real litmus test” started from the time of the DoE approval.

“With the DEIA approval now secured, investors’ attention will naturally gravitate towards management’s ability to secure the maiden offtakers for Tanjung Piai,” he said.

Benalec’s stock closed unchanged at 63 sen on Thursday, but fell to 59 sen at Friday's close.

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