Gwadar is strategically located on the western end of Balochistan coast on the opposite end of the Gulf of Oman, which is an important route for oil tankers bound for Japan and western countries out of Gulf. Since outflow of goods from western China and Central Asia reaching Gwadar will pass through this overland trade route, Pakistan could earn millions of dollars a year in terms of port and cargo handling charges and also as freight charges for import cargoes and export goods. There is proximity to oil and gas resources and Gulf countries, there are some agricultural and mineral resources and there is tax-free status for investments and trade. Gwadar Port is expected to generate billions of dollars in revenues and create at least two million jobs.

Gwadar has the potential to acquire the status of a center piece as the Gate to Strait of Hurmuz. It can compete with the United Arab Emirates ports by improving the exiting links to Caspian Region, and thus providing a better trade route to land locked Caspian Region.

Gwadar has the potential to be developed into a full-fledged regional hub and a trans-shipment port in the future. In case Strait of Malacca is blocked by U.S, Gwadar can serve as an alternate route for the Chinese trade in the Indian Ocean and to Western Asia.

In military and strategic terms, Gwadar can help China to monitor the sea-lanes from the Persian Gulf as about 60% of Chinese energy requirements come from the Persian Gulf and transit along this sea-lane. The port of Gwadar Port can provide China a Listening Post to observe the Indian naval activities around the Persian Gulf and Gulf of Aden. China’s coastal plan has also been announced to invest $12 billion in multiple projects in Gwadar and other parts of Pakistan including a refinery with the processing capacity of 60,000 barrels of crude oil per day.

Med Term Plans

In a recent visit of the Pakistani Premier to China, the Pakistani & Chinese teams signed numerous projects related to Gwadar. They are calling it an Economic Corridor, where there would be a train and road link from Kashgar to Gwadar,  a motorway & a bullet train better Lahore and Karachi and a fibre link upto the chinese border.

Central Asia and South Asia, encompassing Caspian Region, Central Asian Republics, Afghanistan and Iran and the energy-rich ‘lake’ called the Caspian Sea, is a significant region because of its huge monetary prospective and geographically vital positioning, which has formed the region as a center piece in the international arena. In February 2013, Iran announced to set up a $4 billion oil refinery in Gwadar with an estimated capacity of about 400,000 barrels per day. According to the original plan, Tehran will also lay an oil pipeline from its territory to Gwadar to transport crude oil for processing.