Eurasia Review, 4 September 2015. Thailand’s Kra Canal: Is Vietnam Angling In? – Analysis, by Graham Ong-Webb.

Vietnam’s decision to build a deep-water seaport off its southern-most province of Ca Mau may signal the eventual building of Thailand’s Kra Canal as a new regional shipping lane, writes Graham Ong-Webb. And Australian companies are heavily involved with the building of Hon Khoai Port which will most likely receive Australian coal.

An edited extract of the original article appears below.

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Talk just won’t go away about a possible shipping lane – the Kra Canal – that, if it ever were to materialise, would be built through Thailand’s Kra Isthmus, enabling ships to bypass the Strait of Malacca, and, in the process, Singapore’s port hub…

Enter the Vietnam angle?

Officials from both countries quickly denied the report in a matter of days. Still, that did not stop speculation that the project will be revived. Then in July, Vietnam announced that it would build a US$2.5 billion deep-water seaport, named Hon Khoai Port, on an island 17km off the coast of Ca Mau, Vietnam’s southern-most province. The project was approved by Prime Minister Nguyen Tan Dung.

On the surface, any link between Hon Khoai Port and the Kra Canal… would not seem apparent. This is because the deliberation over the port has been couched within the larger issue of Vietnam’s decision to increase its coal imports to meet growing energy needs.

True, a Wall Street Journal report cited Indonesia and Australia as the “most promising” among four coal providers, besides China and India, for Vietnam. Sitting astride the Gulf of Thailand and the East Sea, Hon Khoai Port is well sited to receive Indonesian and Australian shipments. But the decision to build the port does not really make complete economic sense – until it is superimposed on the potentially heady commercial traffic the Kra Canal stands to provide.

Catering to non-coal imports

The project has undergone two different configurations, but both set-ups cater to commodities beyond coal. The current configuration is the outcome of the 2015 feasibility study undertaken by Bechtel Corporation, the largest US construction and civil engineering company, in a deal signed with Vietnamese firm Van Phong. This set-up will see 12 transhipment berths planned for the port, half of which will be dedicated to non-coal imports.

The previous configuration, by the Vietnam Marine Administration in partnership with Australian-based N&M Commodities*, called for 24 piers in which only half were for coal. The rest would cater to bulk goods, containers, petroleum, LNG (liquefied natural gas) and roll-on/roll-off ships designed to carry wheeled cargo – the very commodities and products that would pass through the Kra Canal and coming from as far as the Middle East and Europe…

* [N&M Commodities are also working with CSIRO and Water Australia. Separately, Water Australia will be well represented at Viet Water 2015 which will be held from 25-27 November 2015 in Hanoi.]

 

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