By Leslie Lopez, South-east Asia Correspondent

A worsening ownership battle for a planned Malaysian bunkering facility to rival Singapore's is threatening to derail the project and could hurt one of the country's largest commercial banks.

The project to build a bunkering depot on a reclaimed island in Johor is being led by a little-known private company called KIC Oil and Gas, which has so far drawn down nearly half of its RM1.4 billion (S$584 million) financing facility from state-controlled CIMB to fund construction work.

But KIC's failure to resolve problems with another key shareholder of the project, Seaport Terminal, which owns two of Johor's main ports including Tanjung Pelepas, has prompted CIMB to consider suspending further funding for the construction of the bunkering facility, government officials and financial executives said.

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