The Malaysian government has approved a seven-billion-U.S. dollar pipeline plan to transport Middle East oil through its northern peninsular to East Asian countries, Prime Minister Abdullah Ahmad Badawi said Monday.

"Yes, we have agreed to the pipeline," Badawi told reporters after opening the World Halal Forum 2007 at the Kuala Lumpur Convention Center.

The pipeline project is part of the government's move to develop the northern region, said Badawi who is also finance minister.

"We have always wanted to do more for that (northern) area and this also will take care of the Eastern Corridor," he said.

The prime minister made the remarks when asked to comment on a report carried by the New Straits Times (NST).

The local English daily on Monday reported that a Malaysian company, Trans-Peninsular Petroleum (TPP), plans to invest a whopping seven billion U.S. dollars over eight years to build a crude oil pipeline, which will help ships bypass the busy Malacca Straits.

The 300-kilometer pipeline will cross three states in northern peninsular, running through Yan in Kedah state to Bachok in Kelantan state, TPP Chairman Rahim Kamil Sulaiman told the newspaper, adding storage tanks will also be built.

"The initial phase of two million barrels of oil per day is expected to cost about 2 billion U.S. dollars, and the investment will increase to 4.5 billion U.S. dollars and 7 billion U.S. dollars upon completion of the second and third phases of the project, respectively," Rahim told the NST.

He said investors will be invited to join the project, including key oil producers of the Middle East, Islamic Fund and major consumers in East Asia.