Saudi Aramco is here. Kuwait Petroleum is here. QatarEnergy is here. PetroChina is here. Vitol is here. Trafigura is here. Vopak is here. Seven of the world’s energy giants, all circling the same asset: Pakistan’s storage capacity.
Look at Pakistan’s geography. To the west lies the Gulf, where nearly one-third of the world’s oil is produced. To the north lies Central Asia, a landlocked region that consumes nearly 757,000 barrels of oil a day. To the northeast lies China, the world’s second-largest oil consumer, burning more than 16 million barrels a day and importing around 11 million barrels a day. To the east lies India, the world’s third-largest oil consumer, using nearly 5.6 million barrels a day.
Look at Pakistan’s geography once again. Pakistan is close to production. Pakistan is close to demand. Pakistan is close to chokepoints. Pakistan is close to opportunity. Pakistan’s geography is real.
Red alert: Right now, Pakistan’s geography is the most underpriced asset on the face of the planet.
Look at Pakistan’s geography one more time. Pakistan sits just outside the Strait of Hormuz. Every regional crisis reminds the world of one hard fact: energy security is no longer only about production. It is also about storage, routing and redundancy.
Look at Gwadar, Hub and Port Qasim. Gwadar, Hub and Port Qasim can provide storage, re-export, emergency supply and regional distribution options. For Gulf producers, storing some fuel outside the Gulf reduces chokepoint risk. For Pakistan, storage increases energy security.
Saudi Arabia, Iran, UAE, Iraq, Kuwait, Qatar, Oman and Bahrain need Gwadar, Hub and Port Qasim. China needs Gwadar, Hub and Port Qasim. Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan need Gwadar, Hub and Port Qasim.
Three steps stand between Pakistan and Pakistan’s ‘Energy City’: a legal framework, bankable contracts and regulatory predictability. That’s it.
Look at the intersection: The Gulf is looking for strategic depth. China is looking for supply security. Central Asia is looking for access. Pakistan is looking for dollars. This is the opening. This is the intersection. That is Energy City. Yes, the oil may belong to Saudi Arabia, Kuwait or global traders. Pakistan’s benefit is the oil rent. Storage rent. Port charges. Pipeline tariffs. Blending fees. Bunkering margins. Insurance. Logistics. Security services. Jobs. Taxes. And foreign exchange.
Start with 17 million barrels of strategic storage. That alone can bring $500 million to $1 billion in investment. Storage rent can bring $50 million to $120 million a year. Scale that to 50 million barrels and Pakistan begins to look at $500 million to $1.2 billion a year. Build a mature hub – storage, bunkering, blending, pipelines, insurance, testing, trucking, re-export – and the number can cross $1 billion a year.
That is the business model. Not ownership of oil. Ownership of location. Ownership of storage. Ownership of movement. Pakistan has a choice: remain a country that imports energy insecurity or become a country that exports energy security. The mother of all questions is whether Pakistan’s governance can convert geography into cash flow.
The writer is a columnist based in Islamabad. He tweets/posts @saleemfarrukh and can be reached at: [email protected]
