Gas could be flowing through a long-delayed pipeline from the Gulf of Thailand to Malaysia in early 2005, according to the latest timetable for the project.

Apisit Rujikeatkamjorn, a Trans Thai-Malaysia (Thailand) Ltd (TTM) board member, has said that the 30 billion baht ($689.8 million) pipeline and gas separation plant would begin operating by January 2005.

"Day one is February 1, 2003, and 23 months from then we will start our commercial operations, on January 1," said Apisit, who recently stepped down as TTM's chief executive but remains on the board of the company.

The pipeline project, a 50:50 joint venture between Thailand's PTT PCL and Malaysia's state-owned Petronas will bring gas from the Gulf of Thailand to Songkhla province, where a gas separation plant will be built.

From there, the onshore 34-inch diameter pipeline will connect to the Malaysian pipeline system in the northern state of Kedah.

The project will involve offshore and onshore pipelines totaling 374 kilometers, with most of the onshore pipeline laid alongside roads or existing power grids.

According to the gas sales agreement, initial gas flow to Petronas will be 390 million cubic feet per day for the first five years.

Trans-Thai Malaysia Co, the developer of the $700 million pipeline, now hopes to complete its land purchases by the end of this year and award the construction contracts early in 2003.

"Once we have completed the land acquisition process, we should be able to fix the date to award the engineering, procurement and construction contracts," Alida Nutkanjanakul, vice president of Trans-Thai Malaysia Co said.

"Our latest estimate (for the award of the contracts) is around early next year and the first gas could be transmitted through the TTM facilities in early 2005," she said.

Having been originally scheduled to be operational in mid-2002, the project was delayed for more than two years due to opposition from environmental lobbyists.

In May, the Thai government gave its go-ahead to the projects, but with a relocation of the original planned site of the gas separation plant.

Acquiring a suitable site for the plant project has been the main cause of the delay in the pipeline's construction.

"We are trying to talk to the land owners but it's a big piece of land that belongs to so many landlords. We need to talk to them to buy the land, and it's not an easy or a short process," says Nutkanjanakul.

Nevertheless, TTM has set the timeframe for the completion of the land purchases for the end of the year.

Four contracts will be awarded early next year for the supply of the pipes, the onshore and offshore laying of the pipes and the construction of the gas separation plant.

It will take about three months after the award of the contracts before actual construction on the site begins. Financing has also been delayed until the project plans were finalised.

According to Nutkanjanakul, the debt to equity ratio will be 7:3, translating to a debt financing requirement of about $490 million.

"As for the structure (of the financing), there have been delays and market changes, so we have to make ourselves flexible," she said.