Saudi Arabia has dealt China and Pakistan a heavy blow with its one decision. He decided to move the proposed $ 10 billion oil refinery from Gwadar to Karachi. Gwadar is considered the most important part of China’s ambitious Belt and Road project. However, Saudi Arabia’s move fueled speculation that it would lose its identity as a mega-investment center.
The Pakistani prime minister’s special assistant for energy and oil, Tabish Gauhar, told the media that Saudi Arabia would not build its own refinery in Gwadar but with a petrochemical complex somewhere near Karachi. He said that over the next five years a second refinery with a capacity of two lakh barrels per day could be built in Pakistan. Saudi Arabia signed the agreement for this project in February 2019.
Wasn’t Gwadar a good idea?
The decision to move the project to Karachi shows the lack of infrastructure in Gwadar. A Pakistani official told Nikkei Asia on condition of anonymity that the Gwadar refinery was not a good idea. “A good location for the Gwadar refinery would have been when a 600 km pipeline linked it to Karachi, the country’s oil supply hub,” he said.
Currently, an oil pipeline connects Karachi to northern Pakistan, not to the east. Without a pipeline, it would have been very expensive to transport oil from Gwadar to the center of the country. He says that with the current pace of development, Gwadar’s infrastructure problems do not appear to be resolved for the next 15 years.
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The official also indicated that Pakistan’s energy sector agreements with Russia could be behind the Saudi decision. In February 2019 itself, a delegation from Russia also pledged to invest $ 14 billion in various energy projects. These have not been worked out, but after Pakistan, the Saudi option is definitely open. According to the report, the Gwadar refinery was also not a good idea for safety reasons.
The relocation of the Gwadar refinery to Karachi also indicates that the CPEC (China-Pakistan Economic Corridor) or the Chinese BRI (Belt and Road Initiative) have failed to promote Gwadar as a mega investment hub. Foreign direct investment in Gwadar will be limited and will remain on the Chinese side. Due to this development will also be limited here. It also raised the question that in 6 years what work has been done by Pakistan and China to improve the infrastructure of Gwadar.
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