Gwadar soon will become ‘base station’ for import and export of oil to Middle East
Saudi Arabia has shown a keen interest in China-Pakistan Economic Corridor (CPEC) primarily to relate its economy with China and take steps in achieving its Vision 2030, which aims to diversify the economy with energy mega projects to reduce oil dependency. This would also utilize the unique location of Gwadar to become a global hub for vast economic activities. CPEC would provide the Saudis with an opportunity to participate even better in world trade traffic. Saudi Arabia will also be able to help China have a better crude oil supply. China is one of the largest oil consumers and highly dependent due to its trade and business activities. Therefore, Pakistan and Saudi Arabia both can benefit from the exclusive trade routes under CPEC.
Saudi Arabia has shown a keen interest in diverse fields, including mineral, fertilizer, wind and solar energy and has also offered assistance in establishing LNG reservoirs. Presently, Pakistan has reservoirs of petroleum products, but the country has no LNG storage facility. LNG comes straightway from the vessel, shifted to terminal and injected to transmission lines directly for onward supply to consumers. In order to meet the energy needs of the country, a liquefied natural gas (LNG) storage facility to maintain the strategic stock of the commodity needs to be established.
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Pakistan wants to develop Gwadar not only as an economic hub but also an oil city consisting of oil refineries and petrochemical complexes under CPEC. Gwadar’s port is being developed as part of the $64 billion China-Pakistan Economic Corridor, an ambitious plan to build energy and transport links connecting the western Chinese region of Xinjiang with the Arabian Sea via Pakistan, as part of Beijing’s broader Silk Belt and Road initiative. The 80,000-acres mega oil city at Gwadar will be used to transport oil from the Gulf region to China through the Gwadar Port. This will reduce the distance to just seven days from Gwadar to the Chinese border instead of the current forty days. After the establishment of the oil city, Pakistan would be able to refine and store imported oil for onward transportation to China using the CPEC route, besides developing fuel supply chain for the landlocked Central Asian states.
Both Saudi Arabia and the UAE become part of China’s Belt and Road Initiative (BRI) by pitching in to invest in Gwadar.Working on an “oil city” and oil refinery in Gwadar port, which is the main port of the BRI’s “flagship corridor” CPEC, these Arab countries have automatically become linked to the most focal part of the BRI. Leading by example, Saudi and UAE involvement can encourage more Arab and African countries like Egypt to become involved in projects in Gwadar. Notably, the UAE has already been providing facilities to locals in the port city as it runs the Karachi-Gulf Express linking up Abu Dhabi, Jebel Ali, and Sharjah with Gwadar. Investing in logistics, ports, oil and gas infrastructure as well as the construction sector, the UAE is planning to set up an oil refinery worth $5 to $6 billion at Gwadar. In the future, Gwadar promises to become a “base station” for the Middle East as it can speed up the delivery of oil exports and imports across the region with consignments from the Middle East and Africa reaching China over a distance of just 3,400 miles.
[box type=”note” align=”” class=”” width=””]The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan[/box]