(EnergyAsia, April 27, Friday) — China and Singapore are backing Pakistan in its ambition to develop Gwadar city along the coast of the southwestern province of Balochistan into a major port to serve the oil, petrochemicals and merchandise trade.

Through to 2015, the Pakistani government plans to invest some US$7 billion to improve road and rail infrastructure to the country’s third port that will facilitate trade into China and India. The masterplan calls for the development of a deep-sea port and an integrated oil-petrochemicals manufacturing complex supported by large oil storage tanks and utilities, modeled after Singapore’s Jurong Island.

China helped initiate the project in 2004 when its government provided 80% of the early investment of US$250 million to build the port while the Pakistani government provided the remaining US$50 million.

Singapore’s port operator PSA International will manage the port and terminal when it starts up this quarter. On February 8, PSA signed an agreement with Gwadar Port Authority (GPA) and PSA subsidiary, Concession Holding Company (CHC), to manage Gwadar which is located near the Straits of Hormuz, and about 70 km from Iran.

Gwadar’s backers envision it as a major trade transit point for Pakistan, Afghanistan, Central Asia and the Middle East. China sees it as a providing an alternative route to delivering oil and containerised cargoes, thus reducing dependence on the increasingly congested Straits of Melaka. When road and rail links from Gwadar are fully developed, trade between China and the oil-rich Gulf States will be enhanced.

Last month, Pakistan President Pervez Musharraf inaugurated the port, hailing it as the region’s main manufacturing and trading hub. With Chinese communication minister Li Shenglin in attendance, Mr Musharraf also announced that China will help build an international airport in Gwadar, bringing prosperity to impoverished remote Balochistan.

China plans to build an integrated refinery-petrochemical complex and oil storage tanks in Gwadar. Last year, China’s largest private petroleum group, the Great United Petroleum Holding Co (GUPC), launched a feasibility study for the project.