However, experts warn that Maharani Freeport is still untested and needs to build a reputation and operational consistency.
The Port of Singapore meanwhile, is integrated with global traders like Shell, Vitol and Trafigura and already handles around 20 per cent to 25 per cent of global marine fuel sales annually, they said.
Maritime transport and logistics expert and consultant Durairaj Govindasamy told CNA that Muar is not a proven logistics or maritime node, and would grapple to win the trust of established oil traders who have long passed through Singapore.
“Muar lacks … industrial clusters, logistics hubs, and hinterland multimodal connectivity,” said Govindasamy, who is Malaysia-based and teaches logistics and supply chain management at universities in The Philippines.
Experts added that some Indonesian ports have also served as established bases for key oil companies and are more operationally mature than Maharani.
They pointed out that Nipah Anchorage in the Riau islands for example is among the world’s busiest STS transfer points for crude oil and is used heavily by Middle Eastern crude bound for China.
Tanjung Uban in Bintan is also regarded as a major fuel storage cluster and has strong links with Singapore fuel traders, experts said.
Govindasamy stressed that the densest shipping lanes of the Malacca Strait run closer to the Singapore – Port Klang axis – away from the Muar coastline. Port Klang is located in Selangor, around 200km north of Muar.
“There must be a compelling enough reason for companies to divert traffic and change ship lanes,” he added.
Govindasamy, who has worked on a national logistics roadmap and trade facilitation master plans for the Malaysian Government, added that while Maharani Freeport could represent a strategic leap, the project “lacks demonstrable demand” and “proven maritime advantages”.
While Maharani has some advantages like depth, less congested waters and potentially lower costs, experts added that it lacks refinery infrastructure for alternative fuel, which Nazery stressed was crucial for Maharani Freeport to compete.
He also noted the need for Malaysia as a whole to move away towards “cleaner energy” given the dynamics of future energy flow in the region, away from crude oil to alternative sources.
“The world is shifting towards cleaner energy sources, so the refinery infrastructure at Maharani cannot just be focusing on crude oil and gas, it needs to start looking at facilitating storage, transportation and handling of ships carrying alternative energy like ammonia and hydrogen,” he added.
The Maharani Freeport project had included plans to develop a green hydrogen and ammonia plant through collaboration with Chinese firm China Energy International Group (CEIG).
However, it is uncertain as to when the plant will be ready.
There are also concerns that the land reclamation for this project has triggered environmental issues.
In 2022, before the project was completed, various media reports outlined how the reclamation has depleted seafood catch for local fishermen in the area, impacting their livelihoods and also damaging the marine ecosystem.
Muar member of parliament Syed Saddiq Abdul Rahman was among those who were vocal, reportedly saying that the fishermen were not consulted and they should receive compensation as their livelihoods had been impacted.
President for environmental group Sahabat Alam Malaysia Meenakshi Raman told CNA that now that the project has launched, it reflects “poor governance” and how the voices of common folk including local fishermen and activists had been “drowned out”.
“This used to be a thriving area for fishing as it has restaurants that tourists come to from all over, including Singapore. It’s unfortunate that this community who are really on the front line of this project has been ignored,” she said.
CNA has reached out to the project’s developer Maharani Energy Gateway for comment on plans to develop a refinery as well as whether there are efforts to assess and mitigate its environmental impact on the marine ecosystem and local communities.
Experts told CNA that environmental issues aside, the bigger picture for the Maharani Freeport now is whether it can remain competitive and yield investments and jobs as promised.
They added that with rising shipping congestion in the area, including in Singapore, it could open a window for Johor to capture spillover demand and secure a long-elusive foothold in the global energy supply chain running through the Strait of Malacca.
Nazery said: “I’m sure (Maharani) will eventually elevate the offerings they have on the menu to become a one-stop strategic gateway capable of delivering a whole spectrum of energy logistics services to position Malaysia as a key player in the Asia Pacific region.”
https://www.channelnewsasia.com/asia/johor-new-maharani-freeport-targets-global-oil-trade-5546666
