Why Gwadar?

Capital suggestion

Ras al Tanura: Ras al Tanura, a city in the eastern province of Saudi Arabia, has the world’s largest crude-export complex and the biggest crude terminal. Ras al Tanura is the single largest supplier of crude to China.

Chongqing Municipality: Chongqing is China’s heartland. Chongqing is one of China’s four directly-controlled municipalities and has a population of over 30 million. Chongqing has the largest production centre for motorcycles and the third largest for automobiles (Ford Motor Company has three plants). Chongqing is the site of a 10 million ton capacity refinery to process imported crude.

Shanghai: Shanghai is China’s most populous city. Shanghai Municipality has a population of 24 million and is China’s commercial centre and a ‘global financial hub’.

Gwadar: Gwadar is a “port city on the southwestern coast of Balochistan. The city is located on the shores of the Arabian Sea, approximately 700 km to the west of Pakistan’s largest city, Karachi.”

From Ras al Tanura to Shanghai: in February 2016, Saudi Arabia was China’s top supplier with shipments of 1.38 million barrels per day. In February 2016, China’s “monthly oil imports from Saudi Arabia hit their second highest level on record.” Moving a barrel of oil from Ras al Tanura to Shanghai in a two million barrel vessel moving at a speed of 23 km per hour at a ship rate of $80,000 per day will cost $0.90 a barrel.

From Ras al Tanura to Gwadar to Chongqing: moving a seaborne barrel of oil from Ras al Tanura to Gwadar and then overland to Chongqing will cost anywhere from a low of $7.15 to a high of $12.40 per barrel. Pakistan to China rail corridor: a modern one-track rail corridor with 12 trains per day “would be able to handle 8.75 million tonnes of cargo per year, or approximately 175,000 barrels of oil per day” at its peak efficiency.

Quantity constraint: China needs to import close to eight million barrels a day. For China, 175,000 barrels a day means next to nothing.

Rail track cost: from Gwadar to Kashgar, at $2.5 million per km, $8 billion. Cost from Kashgar to heartland China: $6 billion (adding capacity). At $14 billion transporting 175,000 barrels a day will not make economic sense.

Port of Karachi: the port is a “deep natural port with an 11.5 km long navigable channel and a 12.2 meter deep approach channel.” According to the Karachi Port Trust (KPT), “Presently about 1,600 ships are visiting Karachi Port annually and the berth occupancy is about 45 percent, which shows that there is enough capacity in the port to handle more cargo.” Why Gwadar? Why not use Karachi where the entire infrastructure is already in place?

Port Qasim: the port is a “deep-water seaport in Karachi on the coastline of the Arabian Sea.” On January 15, 2016, the berth occupancy stood at 55 percent. On July 11, 2016, the berth occupancy was recorded at 40 percent. Why Gwadar? Why not Port Qasim where the entire infrastructure is already in place?

PS: some of the cost estimates have been extracted from the ‘China Sign Post’ – and then cross referenced.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh