Global World – 05
The Great Oil Game: A New Phase
by K.N. Pandita
Pakistan will be investing about seven billion US dollars in next eight years to improve road and rail infrastructure and create a network that links China and the South Asian countries to the Gawadar port on Mekran coast by 2014.
The up coming oil mega-city on the shoreline of Baluchistan has two components viz. the petrochemical city and the biggest refinery with storage complexes and warehouses in the region.
When the project of developing Gawadar as a deep-sea port was undertaken in 2004, Beijing provided 80 per cent of 248 million US Dollars as the initial development cost of the port. Sino-Pak planners expect the port to initially generate revenue of 23.6 billion US dollars, with a capacity to reach 42.2 billion.
On February 8, 2007, Port of Singapore Authority (SPA) signed an agreement with Gawadar Port Authority (GPA) and the Concession Holding Company (CHC), a subsidiary of PSA. Close to the Strait of Hormuz, Gawadar deep-sea port is likely to be at the convergence of the Persian Gulf and the Gulf of Oman.
This big enterprise pioneered by China has not only trade and commercial aspects of considerable significance but is also of far reaching political and strategic importance to the region, namely the oil rich Gulf and South Asia
With the completion of the project, Gawadar port, just seventy kilometres away from the Iranian border, becomes the economic and trade transit point for Pakistan, Afghanistan, Central Asia and the Middle East. It will facilitate transhipment of containerised cargo, unlock development potential of hinterland and become the regional hub for major trade activities.
When road and rail link is finally established. Gawadar will be China’s first foothold in the oil rich Gulf States and the Middle East.
At present the distance from China’s gateway port for its western region is 3,500 kilometers assuming Kashghar as the main eastern city in Uighur Autonomous Region. But distance from Kashghar to Gawadar is only 1500 kilometres. Thus Gawadar is far more lucrative an entrepot.
With this vision of future trading and strategic prospects, China helped in developing deep-water commercial port capable of handling cargo ships up to 50,000 tons or more.
Oil hungry China is eyeing the untapped hydrocarbon resources of Central Asia. She is already conducting oil transactions with Kazakhstan. But with the impending plan of laying five pipelines from Central Asia to Gawadar China will ensure big oil and gas supplies to run the wheels of her fast expanding economy at home.
China has also the ambition of turning the facility into a transit terminal for Iranian and Afghan crude oil exports.
Reports are that China and Pakistan have already held talks for laying strategic pipelines from Gawadar to Chinese border to transport oil from South Asia. The 14.5 meter deep and 5 kilometer long approach channel through three berths will be capable of handling carriers up to 50,000 dead weight tons. Beijing will build refinery and petrochemical complex at Gawadar with initial 10 million ton capacity, which would later go up to 20 million tons.
Once oil and gas from Central Asia and the Middle East begin to flow into the huge refineries of Gawadar, it will have consequential impact on oil-related regional strategy. In a sense, Pakistan’s Makran coast is gearing up to become the alternate of mega complexes of the Gulf States. This could be called a new phase in the proverbial “new great game”.
(The writer is the former Director of the Centre of Central Asian Studies, Kashmir University).