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READING LIST

DECEMBER 2014 ISSUE

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Force Magazine
Guest Column - Force Magazine
Port of Call
With China’s control of Gwadar port, India should pursue a policy of bi-lateralism and multi-lateralism with IOR littorals
 
Vice Admiral Shekhar Sinha (retd)
By Vice Admiral Shekhar Sinha (retd)

On 18 February 2013, Pakistan transferred control of Gwadar port to China. It may be recalled that earlier the port operations were with a Singapore-based professional company, though the port had been developed by China and later Turkey. The Pakistan Navy had declined to transfer 500 acres of land adjacent to the port which was needed for further development of port facilities. The port remained in semi use for some time till 18 February 2013.

Gwadar lies at the mouth of Gulf of Oman immediately past Straits of Hormuz. The Pakistan Navy was quick to transfer 500 acres of land to the Chinese company for the port development. Some building material have been shipped for building a LNG terminal with pipelines from Gwadar to MP 250, a point on border of Iran/Pakistan as also from Gwadar to Kashgar in Western China. The land boundary between Pakistan and Iran is approximately 37 nautical miles from Gwadar. From this border the Iranian port of Chabahar is approximately 56 nautical miles.

Chinese data on various energy resources is fascinating and also points at its anxiety. It has possibly become the largest net importer of oil surpassing the US. China’s own known oil reserves are approximately 24.4 billion barrels and produced 4.5 million barrels per day a year ago. It consumes roughly10.7 million barrels per day, an increase of four per cent over previous year 2013. That left the nation with net import of 6.6 million barrels per day. China’s own oil reserves are split into 81 per cent on shore and 19 per cent off shore. It has invested in equity of oil fields in Western Africa, Brazil, gas shale projects in North America, Kazakhstan and Sudan. It bought the oil company, Nexen, in Canada for USD 1.5 billion in 2013. It has provided a soft loan for oil to Russia, Kazakhstan, Venezuela, Brazil, Bolivia, Ecuador, Angola, Ghana, to name a few. There is also some arrangement of gas for loan to Turkmenistan. By 2020, China’s imports of oil are likely to become 66 per cent of the total need and will go further up to 72 per cent by 2040.

As far as imports are concerned, Middle East supplies nearly 2.9 million barrels per day, i.e. 52 per cent of China’s total imports, Africa 1.3 million barrels per day, i.e., 23 per cent of total imports, Americas 5,62,000 barrels/day, i.e. 10 per cent and Asia Pacific 129,000 barrels/day i.e., two per cent. China’s largest source of import is Saudi Arabia and Angola, 33 per cent, and Iran 4,39,000 barrels/day i.e., eight per cent.

China has laid land pipeline running 14,558 miles so far. The first one, Kazakh-China which is 1,384 miles, became operational in 2008. By the end of 2014, it will pump 400,000 barrel/day. Russian pipelines deliver 300,000 barrels/day on the Chinese border. Another line will increase the supply by 140,000 barrels/day. Oil from Middle East is likely to be offloaded in Myanmar to avoid transit through Malacca Straits. It may be remembered that 80 per cent of China’s oil import passes through Malacca. China plans to have 90 days oil reserves by 2020.

The energy needs, supply, long chain of transit and the need of security for safe passage and arrival probably constitutes the most important factor in China’s foreign policy execution and her quest for supremacy in the Indian Ocean Region (IOR). The declining power of the US provides an opportunity to China to exert itself. The anti-piracy operations in the Gulf of Aden legitimise its naval presence. It is in this context that the concept of ‘string of pearls’ falls in place. With Sri Lanka, Maldives, Seychelles and African east coast countries under its fold, China has now turned further in the north Arabian Sea. The significance of Gwadar needs to be seen in this perspective.

The operational control of Gwadar is in line with the plan of Makran highway and pipeline through Karakoram into Xinxiang province. The construction of a refinery in Gwadar has been often justified to resolve Malacca dilemma and exposure of China’s supply line to vulnerabilities in the IOR. The underlying worry of unrest in Baluchistan province of Pakistan, Uighur unrest in Xinxiang and the South China Sea disputes impinge on success of the pipeline from Gwadar to China. This is compounded by its internal concerns of growing population, information explosion, and pollution, inequalities in society leading to unrests, corruption amongst political class and the military and non transparent national institutions.

The operational control of Gwadar could not have come at a better time. If one examines the security implications, it would script many hidden concerns of nations active in this region. Most important advantage is the geographical location of Gwadar. It sits on the mouth of Gulf of Oman at the exit of Straits of Hormuz. A majority of the world’s oil has to pass through this narrow passage. This includes close allies of the US, i.e. Japan and South Korea. Most of their imports are from the Persian Gulf. The US itself was dependent on the Gulf for oil but now with the shell gas this dependence is negligible.

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