Oil running out – and Malaysia allows an energy-intensive smelter

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The oil is running out.

Yes, in Malaysia too.

By 2010, we will become a net importer of oil. If our domestic demand for petroleum products continues to increase by 4 per cent annually, we will have nothing left over to export as demand will exceed domestic crude oil production.

Many countries around the world are beginning to feel the energy squeeze. As Peak Oil – the slowdown in oil production, which is incapable of meeting rising demand – sets in, the price of oil will soar. The resulting energy squeeze has already hit dozens of countries in Asia, Africa and Latin America.

Jeroen van der Veer, the CEO of Royal Dutch Shell, has just laid out the “Three hard truths about the world’s energy crisis” and it is sobering food for thought:

  • The first hard truth is that demand is accelerating.
  • The second hard truth is that the growth rate of supplies of “easy oil,” conventional oil and natural gas that are relatively easy to extract, will struggle to keep up with demand.
  • The third hard truth is that increased use of coal will cause higher carbon dioxide emissions possibly to levels we deem unacceptable.

So what do we do? We blow our precious hydro-electric resources on an energy-intensive, polluting (yeah, yeah, it is supposed to be green technology) smelter in Sarawak – a RM7 billion joint venture between Rio Tinto and Cahya Mata Sarawak (CMS) – and we all know whom the latter is linked to. (Check out the environmental protests against Rio Tinto’s smelter in Iceland here.)

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This smelter will soak up all that surplus electricity from the 2,400MW Bakun Dam, whose power we don’t really need at the moment. Whether the Bakun Dam is really capable of delivering the 2,400MW in electricity is another issue – given that the designated catchment area has been badly degraded through logging and conversion to plantations. (Check out the latest Aliran Monthly for more info on the degradation of the catchment area.)

And what has happened to those grand plans to transmit electricity to the peninsula via submarine cables?

Planning for the Bakun Dam itself has been an unmitigated disaster. The project has been plagued by numerous delays, the scandalous relocation of indigenous people, cost over-runs and now uncertainty over what to do with all that surplus electricity if – and that is a big IF – the dam can really deliver 2,400MW. Ever since they took over the ancestral lands of the indigenous people, you could say the project has been jinxed.

Sime Darby is the lead project manager of the Bakun Dam. It is also one of the key parties involved in the Northern Corridor Economic Region project – and let’s not forget its usual business of managing massive oil palm plantations. Isn’t that a wee bit of an overstretch? And we know what happens when a corporation over-extends itself, don’t we. Last time I checked, Sime Darby hasn’t had a very happy record venturing into non-core activities (think Sime Bank).

The smelter firms no doubt are looking for “cheap, cheap” electricity – but at the electricity tariff rates they desire, can we ever recover the billions of ringgit poured into the bottomless pit known as the Bakun Dam?

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malaysianagenda
16 Aug 2007 8.56am

As a nation which states that; “BELIEF IN GOD” as the first priciple in the Rukun Negara. Our model for development has been more of a “secular” (in the context where society is anti-God) than a Malaysian Secular Model where whatever we do is driven by the values of the various beliefs of its people, namely, Islam, Chrisitanity, Hinduism, Buddhism, Sikhism, Toaism and other beliefs. We have place material and physical development as top priority for more than a quarter of a century (era of Mahathism) that there was little space left for our respective people to reflect on our… Read more »