The Pakistani port that could reshape world trade
More than 30 oil tankers pass through the Strait of Hormuz daily, carrying an estimated 35 million barrels of crude, according to oil analytics firms. While Saudi Arabia is the world’s leading producer, Iran ranks as third largest in the Organization of the Petroleum Exporting Countries. With the imposition of stringent sanctions from Nov. 4, US President Donald Trump is determined to curb Tehran’s petroleum exports, which make up 80 percent of its national revenue. As a result, 2 million barrels per day will vanish from the market, sending prices skyrocketing.
The US sanctions have outraged Iranian President Hassan Rouhani, who is threatening to disrupt oil shipments from neighboring Gulf countries. The so-called moderate leader has repeated the mantra of its predecessors: The Arabian Gulf is 55 kilometers wide at its narrowest point. This fact has been used by Iran to blackmail other countries whenever it is pressed to the wall.
In fact, due to national boundaries, the actual width of the shipping lane is no more than 3.2 kilometers. During the war with Iraq in the 1980s, Iran attacked the oil tankers of its Arab rivals. The shipping lane handles 85 percent of Asia’s energy needs, and the US Navy had to intervene to keep the supply open.
In January 2012, after the imposition of UN Security Council sanctions, Tehran threatened to use the same strategy. Its navy conducts frequent exercises in the name of countering piracy and defending its coastline, and with a more sophisticated maritime arsenal than was the case in the 1980s. Thus, the Ayatollah’s men can make good on the threat, albeit in a suicidal manner.
Iran-Arab relations have sunk to their lowest ebb, although both sides have exercised restraint in engaging in direct confrontation. However, US sanctions and a weakened Iranian rial could force the regime to take extreme measures, ending any hopes of reconciliation. The Arab states of the Gulf have not only prepared themselves militarily but also worked out other options such as diverting exports toward the Red Sea coasts to maintain an uninterrupted supply of oil.
China’s development of Gwadar port at the mouth of the Arabian Sea, 400 kilometers from the Strait of Hormuz, offers a promising solution. Since China is the GCC member states’ biggest trading partner and energy importer, the security situation in the Gulf is of prime concern to Beijing. Yet, half of its oil needs are met by Middle Eastern states supplied through, for instance, the Dubai-Shanghai route.
Pakistan’s Frontier Works Organization is building a Gwadar-Urumqi pipeline for crude oil. The UAE, which holds a 40 percent stake in Pak-Arab Refinery Limited, has revived the Al-Khalifa Refinery project worth $6 billion. China’s Huanqiu Contracting and Engineering Corporation is also mulling over installing an oil refinery at Gwadar. Thus, the contours of Gulf-Gwadar-Urumqi oil supply route are beginning to emerge.
Gwadar’s role as an auxiliary anchorage for oil supplies to Pakistan, China and the GCC’s Asian customers can redefine the world’s economic geography.
Naveed Ahmad
Pipelines such as the Atacama, Trans-Alaska and Trans-Asia are a fitting reply to skeptics pointing to mighty glaciers and mountains along the Karakoram Highway and the Khunjerab Pass.
Overcoming barriers such as high altitude, subzero temperatures and harsh terrain solve half the problem, meaning China’s petroleum shipments can abandon risky and exhaustive route to Shanghai.
Threats such as Rouhani’s can be addressed only if a network of GCC pipelines ends at the Gwadar port. China and a few Gulf Arab states are studying the feasibility of pipelines to Gwadar, which will not only secure oil supplies to Pakistan and China but also become home to massive storage depots in the wake of a direct conflict between Arab states and Iran.
Rewind to the 1950s when Pakistan was instrumental in the early restoration of Japan’s post-war sovereignty and economy. During one of the high-level exchanges in 1957 and later, a Japanese proposal to build massive oil storage depots along the Makran coast was studied. The plan was shelved because of a host of factors, including Pakistan’s internal chaos and lack of long-term vision.
During the 1970s, Pakistan’s Premier Zulfiqar Ali Bhutto considered handing Gwadar port to the Kremlin for a Soviet naval base. The deal was never formalized. Across the international border, the Shah of Iran agreed to Washington building a naval base in Chabahar, 100 kilometers from Gwadar.
During its war with Iraq, the Arabian Sea port of Karachi served as the supply hub for Iran. Now investments by Arab states in Pakistan’s coastal areas are causing growing anxiety in Tehran.
In 2025, much of China's western maritime commerce will divert to the Makran coast. Gwadar, perfectly suited to dock large crude carriers, can complement the Gulf’s maritime trade, especially when the Strait of Hormuz will be subject to even more congestion. Gwadar’s role as an auxiliary anchorage for oil supplies to Pakistan, China and the GCC’s Asian customers can redefine the world’s economic geography.
• Naveed Ahmad is an investigative journalist and academic based in the GCC who writes on diplomacy, security and governance. Besides other honors, he won the Jefferson Fellowship in 2000 and UNAOC Cross-Cultural Reporting Award 2010.
Twitter: @naveed360
