Untapped economic potential of Pakistan’s EEZ

Many settlements, including Karachi were developed into large city centres based on their access to sea

And He is the One Who has subjected the sea, so from it you may eat tender seafood and extract ornaments to wear. And you see ships ploughing their course through it so that you may go forth seeking His Bounty and be grateful to Him. — The Quran, 16:14

The oceans, along with coastal and marine resources, play a significant role in social and economic development worldwide. Many settlements all over the world, including Karachi (setup in 1729 as Kolachi, a fishing village), were developed into large city centres of commerce and trade, based on their access to the sea. The World Bank defines blue economy as the “sustainable use of ocean resources for economic growth and improved livelihoods of the people”. According to United Nations Development Program (UNDP) 2023 Policy Brief on Blue Economy, $1.3 trillion is the estimated value of global blue economy and presently about 40% of the world population resides within 100 kilometers of the coast.

The contemporary environment characterised by scarcity of land-based resources and technological advancements have induced states to explore previously unexplored parts of the oceans, including their Exclusive Economic Zones (EEZ). The concept of EEZ is derived from the United Nations Convention on the Law of the Sea (UNCLOS) 1982, which states that “coastal state has the jurisdiction for exploration and exploitation of all marine resources adjacent to the sea-based and its sub-soil, taken to be the band extending 200 miles from the shore.” Within this area, “nations exercise sovereign rights for exploring and exploiting the natural resources (oil and gas, minerals, fisheries, etc), whether living or non-living”. Jurisdiction is also provided relating to: (i) the establishment and use of artificial islands, installations and structures; (ii) marine scientific research; and (iii) protection and preservation of marine environment.

Pakistan is blessed with approximately 1,050km coastline and an EEZ of 240,000 sq km. It is the first country in North Arabian Sea, whose case for extension of Continental Shelf was approved by the UN. The approval added 50,000 sq km, thereby extending the total EEZ to 290,000 sq km, making it larger than the combined land areas of Sindh and Khyber Pakhtunkhwa, and experts terming it as the “fifth province of Pakistan”. The country is ranked 74^th in terms of coastal length out of the 142 coastal states and has a blue economy potential of more than $100 billion. However, presently it contributes an estimated $1 billion or around 0.4% of the national GDP. The National Security Policy of Pakistan 2022 states, “Pakistan’s vast EEZ and coastline present unexplored opportunities for trade connectivity, natural resource exploration and wealth generation. A comprehensive maritime policy will be developed to optimize the blue economy of Pakistan by tapping the economic potential of the maritime sector with special focus on transshipment, ship construction, offshore exploration, ports infrastructure, fishing, coastal tourism, and other maritime industries.”

China-Pakistan Economic Corridor (CPEC), a flagship project of Belt and Road Initiative (BRI), can provide avenues of cooperation for maritime research and development in Pakistan’s EEZ. China has achieved great strides in the maritime domain particularly relating to deep-sea exploration. It has approval from the International Seabed Authority (ISBA) for under-sea exploration beyond 10,000 sq km and holds a global record of conducting world’s deepest sea dive in a manned submersible. In 2020, the two countries carried out a series of joint scientific research expeditions involving oceanographic observation and seismic surveys in Pakistan’s EEZ. Chinese scientists and researchers were joined by representatives from Pakistan Navy (PN), National Institute of Oceanography (NIO), Pakistan Petroleum Limited (PPL) and Bahria University.

According to various studies, it is estimated that Pakistan has 27 billion barrels of oil reserves, offshore and onshore. A study of the United States Agency for International Development (USAID) concluded that 14 billion barrels of crude oil was in the Indus basin alone. The oil production in the country has been constantly declining. During 2021-22, it was 73,000 barrels per day (bpd) compared to 98,000 bpd in 2017 (Dawn, 2022). In 2019, multinational oil and gas firms ExxonMobil and Eni, assisted by Oil and Gas Development Company Limited (OGDCL) and PPL, drilled more than 5500 meters deep into the sea at Kekra-1 but were not successful in finding oil. According to a former Federal Minister for Maritime Affairs, “Pakistan has only drilled 18 holes for oil, whereas India had offshore discoveries after 43^rd attempt, Libya after 58^th, and Norway, a country nobody believed could have reserves, drilled 78 holes between 1954 and 1963 and then hit it big.” He emphasised that these ventures require hope and resilience, and continued attempts would provide desired results.

Pakistan’s EEZ promises immense potential of marine resources, both living and non-living. The seafood industry has a potential of $2.5 to 3 billion, whereas current exports bring back only about $450 million per year. The Senate Standing Committee on Maritime Affairs has recently stated that foreign trawlers illegally take away fish worth $2 billion from Pakistani waters. In terms of fish production, the country is ranked 28^th in the world. Globally, there is commercial interest in fisheries and affiliated marine genetic resources that is leading to the commercial development of pharmaceuticals, enzymes and cosmetic products. Additionally, the country’s EEZ offers significant potential for non-traditional maritime sectors such as tidal energy, deep-sea drilling for oil and gas.

Keeping in view the potential of the blue economy, a National Maritime Policy needs to be formulated by taking input from all relevant stakeholders from public and private sectors to strengthen governance gaps and implement the best practices specified by International Maritime Organization (IMO). Additionally, collaborative arrangements could be made with friendly countries for exploration and exploitation of maritime resources. Since the Paris agreement, there is an increase in global demand for sustainable bonds and those issued in the previous five years have a market estimated value of $1 trillion. Pakistan had earlier raised $500 million by issuing its first green bond in 2021 to finance hydro power projects, including Diamer Bhasha and Mohmand dams (S&P Global, 2023). Therefore, in order to address monetary constraints, the government could tap into the global green market instruments, like blue bonds to finance exploitation of oceanic resources and harness the untapped potential of EEZ.

 

Published in The Express Tribune, November 8^th, 2023.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.