Malaysia is developing a multimillion-dollar project off Johor's Port of Tanjung Pelepas to enable ships to transfer their cargo to other vessels without having to dock at the berths, which officials say will allow higher shipping flexibility and cut costs for shippers.
The project, costing between US$150 million (S$203 million) and US$180 million, will cover an area of 1,200ha, more than three times the size of Sentosa Island. It will be built in the Strait of Johor near Tuas.
The project, in Johor Baru Port waters, is billed as the "world's biggest" ship-to-ship (STS) transfer hub. It will be able to accommodate up to 30 vessels at one time.
Malaysian Prime Minister Mahathir Mohamad witnessed the project's signing ceremony yesterday in Putrajaya involving Malaysian maritime services company KA Petra and Hong Kong-based port operator Hutchison Ports Holdings.
KA Petra has 10 years of experience in doing STS work in Melaka and Johor.
It says on its website that this involves "cargo transfer operations between two seagoing vessels".
The new hub will have man-made "dolphin" mooring structures to berth vessels without the need for piers or docks, and at lower costs for shippers.
The hub, expected to be ready in 2021, will also be able to store 9 million tonnes of petroleum products, KA Petra's executive chairman Shahrul Amirul said in a speech at the ceremony.
The STS hub will expand the footprint of Malaysia's maritime assets in the south right up to the doorstep of the Tuas mega port.
The Port of Tanjung Pelepas, which is the nearest to Tuas now, has 14 linear berths stretching a total length of 5.04km.
Analysts say there are not enough details yet to gauge how the STS facility might divert vessels away from heading towards Tuas, but noted the involvement of giant Hutchison Ports, which owns a stake in Port Klang and is taking a 30 per cent stake in the STS project.
"It depends on how much they charge," said Ms Lim Siew Khee, head of research at CGS-CIMB.
Datuk Shahrul, painting a bullish scenario for the project's future, said in his speech: "Overall, KA Petra estimates that gross domestic product contribution from maritime sector activities in the STS Hub will be in the region of RM18 billion (S$6 billion) to the Malay-sian GDP annually."
Tun Dr Mahathir, asked at a news conference after the ceremony, said the project will not encroach on Singapore waters.
"This project has been discussed over a long time. There were problems we had when Singapore said we are encroaching. We are not encroaching. We are in our waters, and I think this is public knowledge," he said.
The question about possible encroachment was raised as the Republic and Malaysia are involved in a maritime dispute in the Strait of Johor, sparked by Malaysia's decision to extend the Johor Baru Port Limits on Oct 25 last year.
On Dec 6, Singapore also extended its port limits to the full extent of its territorial waters.
The tense stand-off saw a promised turnaround last month, when both countries agreed to jointly suspend their overlapping port claims as a step to begin talks to delimit the maritime boundary in the area.
But Foreign Minister Vivian Balakrishnan said on Monday that two Malaysian government vessels remain anchored in Singapore territorial waters off Tuas, a fortnight after Singapore and Putrajaya jointly agreed to suspend the overlapping port claims.
Dr Mahathir, in the news conference, also took a swipe at comments by the Johor Crown Prince, Tunku Ismail Sultan Ibrahim, who had posted on his Facebook claims by a non-governmental organisation that Johoreans did not know about the project, and that the federal government had kept the Johor state government in the dark.
The Prime Minister said he was surprised that the Crown Prince did not know about the project. "He knows a lot of things, yet he doesn't know about this."
Correction note: The article has been edited for accuracy.