Strategic Importance of Gwadar Port for Pakistan

Introduction:

Gwadar Port is the third deep sea port in Pakistan after Karachi and Port Qasim. Located on the western
end of Baluchistan coast, Gwadar has 600km long coastal belt with beaches and bays. It lies just 624
nautical km to the east of Strait of Hormuz, which is an important rout of oil tankers bound for Japan
and western countries out of Persian Gulf. Once a small fishing town along the Makran Coast is now set
to be become a mega seaport which will fulfill the requirement of three strategically important regions
the oil rich Middle East, heavily populated South Asia and Western China and the economically emerging
resource-laden region of Central Asia. The Gwadar port is expected to generate billions of dollars in
revenues and create at least two million jobs. Gwadar port is the living symbol of Pak-China relationship.
ECO highway, Coastal Highway and other mega projects in road sectors will connect Gwadar free port
with Central Asian States, Gulf States, China and rest of the country. In 2007 government of Pakistan
handed over port operations to PSA Singapore for 25 years.

The construction of a deep sea port at Gwadar is just one component of the Greater Gwadar Plan. Under
this plan, which will be carried out by Gwadar Development Authority, in addition to Gwadar port, a
network of roads, connecting Gwadar with Karachi, Pasni, Ormara and Turbat will be constructed in four
phases.

Location:

The project was sited in an obscure fishing village Gwadar Pakistan’s western province of Baluchistan,
bordering Afghanistan to the northwest and Iran to the southwest. Gwadar bounded by the Persian Gulf
in the west and Gulf of Oman in the southwest located at the western end of Baluchistan coast, Gwadar
has 600km long coastal belt with beaches and bays. It lies 624 nautical km to the east of Strait of
Hormuz, 460km away from Karachi 120km Iranian border in the west.

History:

Until 1958 Gwadar was part of Oman but was transferred to Pakistan on 8 September 1958. The Gwadar
enclave sold to Pakistan (effective 8 December 1958). First time in 1964 it was thought to build a port at
Gwadar and but being ignored for four decades. It was integrated within the Baluchistan on 1 July 1977.
In 1992, Gwadar fish harbor reached its completion. The Gwadar deep sea port project started in June
2002 with the help of China. By the end of 2004 first phase of port had been completed.

Geopolitical Importance:

Gwadar port has great strategic value, enhancing Pakistan’s importance in the whole region. It extended
Pakistan’s importance from Persian Gulf through the Indian Ocean to Southeast Asia and the Fareast. It
is close to the Strait of Hormuz, through which more than 13 million barrel oil per day passes.
Gwadar Port: A Gateway to Southwest and Central Asia:

The April 2002 inauguration of the Gwadar seaport project on the Arabian Sea coast in southern
Baluchistan with the Chinese collection was a landmark event. When completed, the port is likely to
open up new vistas of cooperation and development in the region. However, despite its inability to
secure needed aid, Pakistan always sustained hope that some day the port facilities would serve as
gateway to the Central Asian Republics. But the continued instability in Afghanistan put damper on
these plans. It is expected that nearly 20 countries of the Middle East, Central Asian, South Asia and
China will benefited from this mega-project. The port will provide facilities of warehousing,
transshipment, transit, coastal trade, provision of commercial and industrial facilities for international
export-import trade, especially that of Afghanistan, Central Asian States, Oman, UAE, Saudi Arabia,
Qatar, Iraq, Iran, China and other countries.

World’s natural energy is mostly concentrated in the Central Asian Republics Middle East. Countries like
China and India, due to there ever growing population and increased industrial activity need additional
energy. All these countries are looking for safe, cost effective and uninterrupted supply of natural
energy to sustain their industrial growth and development. Pakistan, due to its geo-strategic location at
the crossroads of three sub-regional systems i.e. South Asia, West Asia and Central Asia is in a position
to bridge this gap by providing the shortest possible route for the transportation of this energy. The geo-
strategic location of Pakistan at the interface of Central and South Asia provides these states the
shortest possible route to the warm waters of the Arabian Sea. Pakistani ports of Karachi and Gwadar
are barely 1600km away. Pakistan can provide these CARs with the transit trade and pipeline routs for
the export of their oil and gas to the outside world, which the CARs desperately need for their economic
development.

The Central Asia region has an area of 1.6 million square miles. Total oil reserves of the Caspian Sea
region are estimated at above 200billion barrels. Currently total production is 1 million barrel per day. It
is estimated that this could reach 3.4 million barrel per day by the year 2012, assuming the increased
demand of oil in the world markets. On the other hand, total gas reserves are over 3,000 billion cubic
meters. Natural gas reserves in the Caspian Region are even larger than the region’s oil reserves. Main
reservoirs of oil and gas are in Turkmenistan, Uzbekistan and Kazakhstan. Due to natural resources
politics of the Caspian Region would continue to dominate the course of events in all regional countries
like Pakistan, Iran, India, China, Russia and other interested stake holders like US, Saudi Arabia and UAE.
The first phase of the Gwadar port at a cost of 250 million dollars was being built with the Chinese
assistance. China had provided 198 million dollar to Pakistan for the construction of Gwadar port. China
also has invested 200million dollar to building a coastal highway that will connect the Gwadar port with
Karachi, Establishment of industrial zone, oil storage and refining facilities adjacent to the port and
export possibility of abundant mineral resources of Baluchistan, particularly from Saindak Copper-Gold
Project, makes it more attractive. The Saindak project had also been leased out to a Chinese firm.
Experts believe that even one Agosta 90B submarine deployed at Gwadar could defend the port due to
its geographic advantage. Why the new emerging super power China has invested heavily in this
project? China doesn’t have any port of hot waters, which can be used the whole year. The Shanghai
port is approximately 4500 km away from Chinese industrial areas and takes an additional time. This
costs them a lot in the form of duties and taxes as well. Compared to this Gwadar port is only at a
distance of 2,500 km from China and the port will be working the whole year because of its hot waters.

China’s decision to finance the construction of Gwadar and coastal highway linking to Karachi will help
its plans to develop western China. The distance from Kashgar to Chinese east coast is 3,500 km
whereas distance from kashgar to Gwadar is only 1,500[1].

Geo-Political and Geo-Strategic ties between Pakistan and China:

Despite having a non-Nato ally status the honey-moon period between the USA and Pakistan is ion the
decline. National priorities have been altered and the USA is in search of new friends and strategic
partners, like India in our region. The policy makers in Islamabad realize the emerging bitter reality and
should not act upon the good wishes of Washington with closed eye any more. Because everyone is
following its hot pursuits similarly the government of Pakistan must look for the safe heaven for the
expected rainy days in the future. Pakistan badly needs energy and , China can provide, or fulfill, our
future energy requirements[2]. According to many regional experts close bilateral Pak-Sino ties may
create geo-political and geo–strategic equilibrium in region in the days to come.

According to official figures, the annual trade between the two countries has already surpassed 7 billion
dollars during 2008 and the sides are aiming to 15 billion dollars by 2011. With the coming of the
agreement on trade in 11 services sectors from October 1,2009, which was signed in February this year
during President Asif Ali Zardari’s visit to China, trade is further going to increase between the two
countries .Currently, 70 percent of Pakistani’s exports to China are cotton yarn and cotton fabric.
Pakistan is also exploring its options with Qatar to construct a five billion dollars gas pipeline project to
supply 1.6 billion cubic feet a day. This pipeline would supply natural gas from Qatar’s North Dome Field
to Pakistan via a sub sea pipeline from Oman. China is also exploring ways to tap Saudi Arabian gas
through Gusa Gas Company of Qatar that already has a joint venture for a deep sea pipeline with
Pakistan. China and Pakistan have agreed in principle to build trans-Karakoram oil pipeline along the
Karakorum Highway to connect Middle East with North-western China through Gwadar. A blue print of
proposed 3300 km long Karakoram oil pipeline was also presented by

Pakistan; this entails a 30-inch diameter pipeline from Gwadar to Khunjerab. The proposed pipeline will
be able to handle 12 million tones of oil per year and would cost between US $ 4.5 and 5 billion.

Development of Gwadar Port:

Pakistan, with the partial financial and technical assistance of China, had completed the first phase of a
deep-sea port in the south-western city of Gwadar, located at the opening of the energy-rich Persian
Gulf. The port was formally inaugurated on 20 th march 2007 by Pakistan’s President, Pervez Musharraf,
and the Chinese communication minister, Li Shasheng. China has also agreed to participate in phase-2 of
the Gwadar Port Project, which will be completed at a cost of $600 million[3]. Phase-2 will include : four
container berths ; one bulk cargo terminal  (to handle 100,000 DWT ships) ; one grain terminal ; one Ro-
Ro terminal ; and two oil terminal (to handle 200,000 DWT ships).
Up-gradation Of The Karakoram Highway:

The decision to up-grade of KKH was taken during President Musharraf’s visit to China in February 2006,
when Pakistan. President Musharraf said, “This road, when up-graded will provide the shortest route to
the sea for products manufactured in China. The same road can serve to provide overland route for
trade between China and India, thus linking two of the largest markets in Asia” we are talking of
Pakistan-China inter-connectivity in terms of energy and trade, improvement in highways, development
of railway link and gas and oil pipeline linkages and even fibre-optic connectivity along the highway
under one project”. Pakistan is also constructing a network of highways and railways with the
country[4]. To facilitate a North-South Trans Energy Corridor (TEC) Karachi has been linked with Gwadar
through a coastal highway, and plains are underway to link it to Iran as well. Another major 950 km long
highway, connecting Gwadar to Turbat, Khuzdar and Ratodero, will be completed in the next 30 month.

Construction of Railways:

A railway line along the KKH, connecting Pakistan and China is being considered as an integral part of the
Trade and Energy Corridor Project. The purpose of building a rail line is not only for trade purposes but
also to transport energy, in case a pipe line is not a variable option. This rail track will be link to Gwadar,
where oil-refining and storage facilities are being constructed. Pakistan railways has short-listed too
companies, one from china and the other one are joint German-Austrian companies, ILF Consulting
Engineers, for the study of 1000 km rail-track.

Energy Co-operation and Pipelines:

A fame work agreement on Energy Co-operation was signed in Beijing on 29 th Feb 2006, between the
Ministry of Petroleum and natural Resources of Pakistan and the National Development Reforms
Commission of China. In the pursuance of this agreement, the first Energy Forum was held in Islamabad
from 25-27 April 2006.at the Energy Forum, a blue print of the proposed 3300 km long Karakoram oil
Pipeline was also presented by Pakistani side; this entails a 30-inch diameter pipeline from Gwadar to
khunjerab, passing through Awaran, Pir Muhammad, Khuzdar, Shikarpur, D. I. Khan, Kundian, Mianwali,
Talagang, Pindi Ghaib, Fateh Jang, Haripur, Mansehra ,Patan, Dasu, Chilas, Bunjil, Gilgit, Sust, and
Khunjerab pass[5].

Benefits for Pakistan:

Pakistan can fulfill her energy needs which are beyond her indigenous production, additionally she can
also accrue number of benefits such as:

1)      Enhance trade with CARs / Middle East.

2)      The relations with neighboring and regional countries can be improved and trade can be enhanced.

3)      Through IPI /TAPI pipelines, relations with India can be normalized and that can also act as CBMs.
4)      Pakistan can earn lot of foreign exchange through transit fee and improve her foreign exchange
reserves.

5)      The transit fee can be utilized for development purpose.

6)      There will be a gradual growth and improvement in most of the backward areas and towns /
villages.

7)      The living conditions and literacy rate of these areas can also be improved.

8)      Lot of new jobs would come up due to new projects which would lower the overall rate of
unemployment.

9)      Tourism and hotel industries can be boosted as no of foreigners would be visiting Pakistan for the
construction of these projects.

10)    It would improve the overall economy of the country.

Conclusion:

Located at the entrance of the Persian Gulf and about 460 kms from Karachi, Gwadar has had immense
Geostrategic significance on many accounts. The continued unstable regional environment in the
Persian Gulf in particular as a result of the Iran/Iraq war, the Gulf war and the emergence of the new
Central Asian States has added to this importance. Considering the Geo-economic imperative of the
regional changes, the ADB’s Ports Master Plan studies considered an alternate to the Persian Gulf Ports
to capture the transit trade of the Central Asian Republic (CAR) as well as the trans-shipment trade of
the region.

It’s amazing that tomorrow’s small fishing village ‘Gwadar’ is fast emerging as a Deep Sea Port today.
This is important to note that the Government of Pakistan, keeping in view its utmost significance in the
area, has declared ‘Gwadar’ as a Duty Free Port and a Free Economic Zone.
In fact, Gwadar enjoys the status of a third Deep Sea Port of Pakistan which has a special significance
with reference to trade links with Central Asian Countries, Persian Gulf, East Africa, United Arab
Emirates and North Western India.