AFTER selection of Port of Singapore Authority International (PSAI) as operator for the Gwadar port, the deep-sea port in Gwadar is likely to be operational in next two months.

The Gwadar port, and future plans of cross-national oil pipelines traversing the state would further enhance the region’s strategic value. Gwadar in southern Balochistan would be the terminus of gas pipelines from CARs including multibillion dollar pipelines reaching either from Daulatabad’s fields in Turkmenistan, South Pars fields in Iran or from Qatar.

The developments in the surrounding region of Gwadar like the unrest in Balochistan, America’s virtual control of Afghanistan, the emerging role of Shanghai Cooperation Organization (SCO), big powers’ quest for energy security are all indicative of the ‘oil politics’ brewing up in the region..

The SCO is planning to form an "energy working group" that would bring together experts from member states to consider regional gas and oil pipelines, hydropower projects and other ventures. Gwadar on the confluence of South Asia, West Asia and Central Asia can provide a strategic base to China for expanding her stakes.

China needs Gwadar port facilities for future oil and gas imports. While there is a suggestion in Pakistan that Gwadar should be declared a free oil port, Beijing is reportedly negotiating with Islamabad for around five oil and gas pipelines from Central Asian Republics (CARs).

China has shown interest in a trans-Himalayan pipeline to carry the Middle Eastern crude to western China. It would allow Beijing to reduce the portion of its oil shipped through the narrow and unsafe strait of Malacca carrying up to 80pc of its oil imports. The proposed pipeline would link Gwadar port with China's remote western regions, and it would be partly financed by Beijing.

The Chinese oil companies are also in talks with Pakistan about construction of a refinery at the Gwadar port . Islamabad is reportedly considering a raft of incentives from free land for refinery construction, to allowing unlimited duty-free import of crude for processing, sales tax exemption for refined product exports and infrastructure.

It wants to build a refinery and petrochemical complex with an initial 10m tons per year (200,000bpd) capacity, later expanding to 21 million tons. The route over the Himalayas would be an expensive and challenging engineering feat, and once the oil reached China it would likely have to be shipped thousands of kilometres further east to coastal areas, where most energy demand is centred. The pipeline would go in tandem with the Karakoram Highway.

For being strategically located outside the sensitive area of the Strait of Hormuz, the Gwadar port could play an important role in future containerised trade in Asia. The large crude containers of up to 0.5 million tons dead weight form a crucial part of the international oil movement. For every one million barrels daily outlet capacity at Gwadar, Pakistan could possibly net over a third of a billion dollars a year in revenues besides other indirect economic benefits.

China’s stake in Gwadar is causing much discomfort among regional players of geo-politics. Her involvement in the Gwadar port project has also caused suspicions in the minds of strategic thinkers in the Pentagon. The US strategy of advancing into the Central Asia and the Gulf was mainly aimed at pre-empting China from the Central Asia and the Gulf.

The proposed TAP gas pipeline would involve the construction of a pipeline about 1,700 kilometres up to Gwadar. From Gwadar, this gas would then go onto the world markets. Pakistan and India are currently involved in talks with Iran to get Iranian gas by building a gas pipeline from Iran to India via Pakistan.