Mentri Besar Datuk Mukhriz Mahathir said the state government was very keen to undertake the multi-billion ringgit project, which promises lucrative returns from the oil and gas sector.
"(However) I don't expect the realisation of the project to be easy as Kedah lacks experience in the petroleum industry.
"Kedah has never been synonymous with the oil and gas industry. So, we have to start from scratch, from nothing, to establish an industry.
"This is not an easy task to undertake," he told a media conference to mark his 100 days as the Kedah Mentri Besar.
Mukhriz said several matters have to be resolved first, including land acquisition, investment partner of Merapoh Resources Corp Bhd, the project developer, and the source of crude oil before the project can get off the ground.
He said Merapoh Resources Corp has been asked to conduct a feasibility study to avoid the project from becoming a "white elephant" later.
Mukhriz said land reclamation has been suggested as an alternative solution to implement the project while a company from China has shown interest to invest in the area.
"I've not seen the report on the capabilities of the Chinese company but I was given to understand that the company is a government-linked company.
"So, I think they will have the financial capacity to invest billions of ringgit in the area," he said.
Mukhriz said the deciding factor for the project was the source of oil to be extracted and processed at the petroleum industrial zone.
"Earlier, it was said that Iran was prepared to supply crude oil, but that was not enough as we all know that Iran is facing economic sanctions imposed by the United States.
"We do not want to be in cohorts with the US but at the same time, it's difficult to get shipping services from ports in Iran to come to Malaysia," he added.
Zipy was announced in 2007 by the then Barisan Nasional state government. The project entails the construction of an oil refinery to process crude oil from West Asia before the oil was sold to East Asian countries.
PAS, which took over the state administration after the 12th General Election in 2008, agreed to continue the project and renamed it as Sungai Limau Hydrocarbon Hub (Sulihh).
However, the PAS state government's plan to adopt a different method to reclaim land from the sea instead of the initial proposal to acquire land failed to be implemented.
The project was delayed because the appointed developer faced financial and technical problems, the PAS government claimed.
Under the Barisan government's initial planning, the project is expected to be completed this year and generate RM400mil in revenue a year to the state government, besides providing jobs to some 15,000 Kedahans. - Bernama
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