Oil pipeline: Chinese team arriving to hold crucial talks

Published: August 20, 2013
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The negotiations will be the follow-up to Prime Minister Nawaz Sharif’s visit to Beijing in early July, when he floated the idea of constructing an oil pipeline from Gwadar Port to western China for the transport of oil.

The negotiations will be the follow-up to Prime Minister Nawaz Sharif’s visit to Beijing in early July, when he floated the idea of constructing an oil pipeline from Gwadar Port to western China for the transport of oil.

ISLAMABAD: 

Pakistan and China are set to engage in crucial talks this week on laying an oil pipeline from Gwadar Port to western China – an attempt that will allow Beijing to diversify and speed up import of crude oil.

A Chinese team is expected to reach Islamabad on August 22 to hold talks on energy issues including the oil pipeline, sources say. China had expressed interest in investing in Gwadar after Pakistan handed over control of the port to Beijing.

The negotiations will be the follow-up to Prime Minister Nawaz Sharif’s visit to Beijing in early July, when he floated the idea of constructing an oil pipeline from Gwadar Port to western China for the transport of oil.

“Now, the two sides will discuss modalities of the project and undertaking a feasibility study to assess technical and financial viability of the pipeline,” an official said.

Later, officials said, the oil pipeline could be extended and connected with Iran which has already offered to lay a pipeline from its territory to Gwadar for supply of crude oil.

Iran had also announced its intention to set up an oil refinery with oil production capacity of 400,000 barrels per day at Gwadar Port during the tenure of previous government.

“This proposal may be feasible after the Chinese take operational control of Gwadar Port,” the official said, adding Gwadar was quite close to the Persian Gulf from where nearly 40% of the world’s oil supply passes.

According to the officials, China meets 50% of its oil demand through imports from the Middle East. Oil supplies come via Dubai-Shanghai-Urumqi route covering over 10,000 kilometres.

“Crude oil processed and refined at the Gawdar oil refinery can be exported and transported to Urumqi through the shortest possible route – Dubai-Gwadar-Urumqi covering about 3,600 kilometers – by laying an oil pipeline through the envisaged energy corridor up to western China via Karakoram Highway and Khunjrab bypass,” the official said.

Hurdles in the way like high altitude, freezing temperatures and a difficult terrain can be overcome with the help of technological advancements. Many countries have successfully completed similar pipeline projects under extreme conditions and at high altitude such as Atacama gas pipeline, Trans-Alaska pipeline and Trans-Asia gas pipeline.

Coastal Oil Refinery

China will also discuss the feasibility of setting up an oil refinery at Gwadar in talks with Pakistani authorities. Islamabad has already pressed for reviving the stalled Coastal Oil Refinery project, which had been shelved by China in 2009-10 after the control of Gwadar Port was given to Singapore Port Authority. Global recession proved another stumbling block in the way of resuming work on the project.

Coastal Oil Refinery, which was designed to process up to 60,000 barrels of crude oil a day, was part of China’s plan to invest $12 billion in multiple projects in Pakistan.

Published in The Express Tribune, August 20th, 2013.

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Reader Comments (6)

  • Hari Om
    Aug 20, 2013 - 8:12AM

    It is all very well to conjure up grandiose plans for oil pipeline, refineries and what not radiating out from Gwadar towards the Peoples Republic of China. What is however more important is in what time frame will these grandiose plans actually materialise, if at all.

    On the timeliness score Gwadar scores particularly poorly. Gwadar which was touted as the next Dubai even today remains sporadically used and that to only for Government imports of fertiliser and wheat which by virtue of being tax payer subsidised need not be particularly scrupulous about being sensitive to freight economics despite the passage of some six and a half years since its inauguration. Hardly the sort of on the ground performance that suggests Gwadar has the potential to see these grandiose plans fructify within an meaningfully appropriate time frame. Perhaps the only opportunity that Gwadar Port has thrown up is for the Military to gouge the civilian taxpayer in order to provide a bolt hole for the Navy that was as far away from India as Pakistan’s coastline would permit.

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  • truthbetold
    Aug 20, 2013 - 8:34AM

    The cost of this pipeline would be in excess of $50B and thus not cost effective. China can import oil into Xinjiang from CAR’s and Russia directly at a much lower cost.

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  • Khurram Awan
    Aug 20, 2013 - 1:10PM

    Pakistan should know how to benefit from these projects. Pakistani government must make a plan that Atleast 30 percent of Output of Oil pipeline capacity must be utilized to transport Oil to Upper Pakistan regions and the rest 70 percent could be sent to China then.
    Along with transit fees the same infrastructure could be used by Pakistan for its own use.

    @truthbetold It will cost less than 5 billion USD in my view. I could give you an Example of White Oil Pipeline in Pakistan which costed less than 600 million USD and its length is around 800 Kilometers. So i dont think so that it will cost much.

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  • unbelievable
    Aug 20, 2013 - 6:23PM

    The concept of a major transit route and pipeline to China sound great but anyone who is familiar with the terrain know that you can’t even keep a decent road operating for part of the year. Further – neither China or Pakistan have the expertise to build/maintain a pipeline through that terrain and the cost maybe prohibitive.

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  • Aug 20, 2013 - 7:21PM

    The pipeline will attract militants like bees to honey.

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  • Asad Khan
    Aug 20, 2013 - 7:57PM

    Some interesting facts:

    Dubai took about both decades of 80 & 90s plus oil revenues of UAE, cheap labour from Indian Sub Continent to become what it is today.

    Gwadar city was just a small town before the port was completed in 2006. The greatest catalyst was not the port, it is actually the Makran Coastal Highway, completed in 2004.

    The plus of Gwadar is that it is now planned. Every acre out of the old town is now penciled for one scheme / project or another.

    Anyone can fill up his/her Gas tank of car in morning from Karachi and reach Gwadar in late evening and had a wonderful meal and nice sleep at very affordable local hotel.

    Gwadar Airport is coming up big by the help of Omani Govt.

    There is absolutely ZERO load shedding in Gwadar. The power comes through Iran and if one is bit inquisitive then one can fill gas tank with Iranian petrol / diesel at half price of current service stations.

    People are friendly and there is no Sardari system in Gwadar. People are Blochis but not from ethnic Baloch of Bugti / Kalpar etc but they are Gichkis & Sheedi (later is dominant in Gwadar)

    Literacy rate is relatively way better and the mood is development oriented not politically charged (maybe due to the fact of being a coastal town). In evening boys plays football NOT Cricket, do one wheeling on bikes.

    Been there, done that.

    regards,

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