Fuel transport: Govt considering plans to lay oil and gas pipelines to China

Pakistan seeks financing from Beijing for constructing pipeline on its territory.

ISLAMABAD: Pakistan is considering reviving plans to lay pipelines for transport of oil and gas from the Gulf and Iran to China through Gwadar Port – a move which will not only meet the burgeoning needs of China’s fast-growing economy but will also provide a new earning source to Pakistan in the form of transit fees.

As India was out of the Iran-Pakistan (IP) gas pipeline project, Pakistan government might again take up the proposal of involving China in the venture, sources told The Express Tribune. Pakistan needs $1.2 billion for laying a pipeline in its territory under the IP gas project and is seeking financing from China.

During the Musharraf regime, the government offered China to participate in the IP gas pipeline project when India backed out following a deal with the United States for transfer of civil nuclear technology. The US believes that Iran is running a nuclear weapons programme and discourages countries and companies from across the world from entering into commercial agreements with Tehran. Iran denies the charge and insists its nuclear programme is only for meeting energy needs.

Pakistan also floated the idea of building a pipeline from Gwadar Port to western China which would take Gulf crude to China to meet its growing needs.

Officials said Gwadar and Karachi ports provided the shortest route to Arabian Sea for western China. A pipeline from Gwadar to western China will reduce the time and distance for transport of oil from the Gulf to China.

Earlier, China had also expressed willingness to set up an oil refinery in the coastal area of Balochistan, close to Gwadar Port, to facilitate oil imports. However, the global financial crisis, which started in the middle of 2008, forced Beijing to shelve the proposal. Sources said Chinese investors were once again taking an interest in setting up the oil refinery in Balochistan.

Orient Group asked to invest in pipelines

In a meeting on Friday, sources said, Federal Minister for Petroleum and Natural Resources Dr Asim Hussain invited Orient Group of China to invest in laying oil and gas pipelines from Gwadar Port to China.

Orient Group, headed by its Chairman Zhang Hongwei, expressed interest in conducting feasibility studies for the pipelines, sources said.

The Chinese delegation also took up issues pending with the Federal Board of Revenue (FBR) and the Ministry of Finance relating to transfer of British Petroleum (BP) assets and related tax matters. Hongwei said his group was investing more in recently acquired BP projects in Pakistan so as to increase production of oil.

Hussain said Pakistan was looking forward to joint ventures with Chinese companies and was specifically focusing on offshore oil and gas projects. “Numerous ongoing mutual projects are a proof of the cordial relationship between the two friendly countries,” he added.

The delegation’s attention was also invited to the presence of huge shale gas reserves in Pakistan.

Published in The Express Tribune, June 18^th, 2011.