In a strategic move, Pakistan and China are set to make headway towards developing a master plan for Gwadar Port as part of an economic corridor that envisages investment of $12 billion by Beijing.
Officials of the two countries will take up the matter during talks in Beijing on February 17, where Pakistan’s team will be led by Planning and Development Minister Ahsan Iqbal, officials say.
As part of the economic corridor that will turn Pakistan into a hub of regional cooperation, Gwadar Port will be connected through road, rail and fibre links to China to help enhance trade between the two countries.
Oil and gas pipelines are also part of the economic corridor over the long run, which is expected to provide a much-needed boost to economic activities in insurgency-hit Balochistan, according to the officials.
Under the short-term plan, Islamabad and Beijing want to develop Gwadar Port, whose control had already been given to China, in a bid to attract investment in different sectors to make it a hub of economic activities. Under this plan, an oil city will be set up at the port to meet fuel needs.
However, the United States and India are not pleased with the handing over of Gwadar Port to China, which will enhance its presence in the sea.
The government is also looking to revive the abandoned Coastal Oil Refinery at Gwadar, a project that had been shelved by China in 2009-10 after operations of the port were handed over to the Singapore Port Authority. A global recession compounded the problems, providing another reason to shelve the project.
The refinery, designed to have a maximum output of 60,000 barrels of oil per day, is part of China’s plan to invest $12 billion in multiple projects in Pakistan.
Officials pointed out that the oil and gas pipelines depended on normalisation of relations between the US and Iran.
Though Iran supplies oil and gas to Turkey, China and India, the US is piling on the pressure on Pakistan to stop it from importing energy from Tehran. Experts describe it an attempt to push Pakistan towards economic collapse due to acute energy shortages.
The PML-N government, which took over in June last year, has already offered Beijing to lay an oil pipeline from Gwadar to western China – a move that will allow the latter to diversify and safeguard crude oil import routes.
Officials suggested that the oil pipeline could later be linked with Iran, which had already offered to build a pipeline from its territory to Gwadar for the transport of crude oil.
During the previous government’s tenure, Iran had also expressed its willingness to set up an oil refinery at Gwadar Port with a production capacity of 400,000 barrels per day.
Officials pointed out that Gwadar Port was quite close to the Persian Gulf through which nearly 40% of world’s oil supply flows. China meets 50% of oil demand through imports from the Middle East. The supply line to China runs over the 10,000km Dubai-Shanghai-Urumqi ocean route.
“The crude oil processed and refined at the Gwadar oil refinery can be exported to Urumqi through the shortest possible route, which is Dubai-Gwadar-Urumqi spanning over 3,600 km. For this, an oil pipeline will be laid through the energy corridor up to western China via Karakoram Highway/Khunjrab Bypass,” an official said.
Published in The Express Tribune, February 15th, 2014.