China backs Karachi refinery

Discussion in 'China' started by ejazr, Aug 31, 2010.

  1. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

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    Asia Times Online :: South Asia news, business and economy from India and Pakistan

    KARACHI - China is to invest US$535 million to restart a stalled refinery project in Pakistan, which foreign investors and contractors abandoned amid the political turmoil in the country following the assassination of former prime minister Benazir Bhutto in December 2007.

    The Indus Refinery Ltd (IRL) was a joint venture project between Middle East-based investors with an 86.7% shareholding and local sponsors with 13.3%, proposed in 2004.

    "The Chinese have been really helpful," The News quoted IRL chairman Sohail Shamsi as saying. "I thought no one would comeand invest in the country. We tried to convince several Middle East
    investors, even the monarchs. But no one was interested."

    The Chinese will replace the Middle East-based investors, after IRL signed a contract with the government in Beijing for the civil works for the project to be restarted, possibly as early as next month.

    The China International Project Investment Management Center this month signed an agreement with IRL to establish the refinery, which will be the country's largest in the private sector. China National Chemical Engineering Group Corp is expected to be the contractor starting the physical work on the project. As a result of using the latest production technologies and through economies of scale, it will have a competitive edge over Pakistan's existing refineries.

    IRL will be the sixth refinery in Pakistan, after National Refinery, Pakistan Refinery, Attock Refinery, Pak-Arab Refinery and Byco Petroleum Pakistan Ltd (BPPL). The country has an installed refining capacity of 12.82 million tonnes a year, but the country's five refineries together produced only 8.11 million tonnes in the fiscal year ended June 2010, an 8% decline over the previous year, against local demand of 20.3 million tonnes of petroleum products.

    Registered as a public company in 2004, IRL had later engaged world-class engineering firm SNC Lavalin of Canada to act as project manager, Ventech Engineers International as process engineer, and advisory firms Jacobs Consultancy and Vitol. The civil work on the project was started by Descon Engineering in 2007.

    However, the foreigners working on the project in Karachi packed up their bags and left the country in the aftermath of Bhutto's assassination during her election campaign in December 2007. The Chinese will now be the lead investors and contractors.

    Despite Pakistan's worsening internal security, the Chinese government and Chinese companies have shown themselves keen to invest in Pakistan's energy sector, which desperately needs foreign investment. Most recently, oil exploration company, Zhenhua, has shown interest in increasing its interest in Pakistan Petroleum Ltd (PPL), the nation's top oil producer. The Chinese company already partners PPL in some joint ventures.

    Last week, Zhenhua vice president Heyang Zuxi called on Federal Minister for Petroleum and Natural Resources Syed Naveed Qamar in Islamabad and told him about the company's plan to invest in PPL, whose output has been hit by the recent floods that have swept Pakistan, inundating some production blocs and cutting PPL production by about 7 million cubic feet.

    China was also earlier interested in constructing an oil refinery in Gwadar, in southern Balochistan province. Petroleum products refined there were to be transported by pipeline through Pakistan to Kashghar in China. The Gwadar project, however, was deleted in the last financial year from the financial development program agreed between the two countries, reportedly in reaction to the global economic recession.

    Unlike the Gwadar project, they IRL refinery output will be predominantly for domestic market. "They [the Chinese] are not investing in Indus Refinery to export products from here to China, but petrol can be exported," IRL chairman Shamsi told The News.

    United Arab Emirates' state-run International Petroleum Investment Co (IPIC) has also halted work on the $5 billion Khalifa oil refinery project in coastal Balochistan. The project was suspended last January due to technical and political reasons. IPIC holds a 74% stake, and Pakistan-Arab Refinery Co the remainder.

    About 50% of Pakistan's energy needs are met by indigenous gas production, 29% by domestic and imported oil, and 11% by hydro-electricity.
     
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  3. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    when one country controls another nations energy, they control the country.
     
  4. arya

    arya Senior Member Senior Member

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    pata nahi humari indian govt kab jage gi

    jab china delhi tak aajaye gaa tab
     
  5. SHASH2K2

    SHASH2K2 New Member

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    chinese are acting smart . They are not doling out free gifts like USA . They are trying to trap Pakistan in their web by giving loans or assistance for critical projects .Their activity is very much similar to East India company. They will milk Pakistan to fullest and then they will kick them once they are sucked dry.
     
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  6. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

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    I think, India should really start moving ahead on the Gujral doctrine of helping neighbours without reciprocity. It has still been in just the theory stage and not implemented in practice. It mightbe that the politicians want it but the Babus are as "efficient" as ever in implementing it. But this should be no excuse.

    Bangladesh at present is probably the most stable and the most friendly country in south Asia and we are still waiting to finalise our border demarcartions which is a very sensitive issue for them. In Nepal, we have probably the most hostile country after Pakistan in South Asia and we have an open border policy that has allowed maoists and Pakistani backed extremists from infiltrating and exfiltrating with ease. Iran is another country where energy investments should never have stopped to sooth American civilities.

    At the same time, "talks" need to be institutionalised with Pakistan as well as China.Talks do not mean surrender but will allow to contain any flare up. Atleast till 2015-2020, India can't afford a full out military action and steps should be taken to avoid that. There are also East Asian countries like S. Korea, Japan, ASEAN and Australia that India should engage so that China is kept busy in that end. Russia and the CARs is another area that needs a focus.
     
    Last edited: Aug 31, 2010
  7. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    well that is the way the chinese work, they fish in troubled waters, set the things right and reap the benefits politically, strategically and economically. they did the same in africa, and the story in pakistan is no different. no freebies from them, rest assured hardly any aid from them, they put one dollar and make sure that the return is decent enough to run the business successfully and from those profits subsidize prices of products/services back home. at the end people in pakistan will forget who gave them the aid but will remember who gave them the employment. americans will be bashed as usual, and chinese will be hailed as their saviors, people who make them earn their bread and butter.

    laxmi mittal worked his way up in no different fashion. he invested in steel projects which were seen as dead, gave employment to thousands, the government listened to all their demands and fulfilled them, in return they had a big say in the framing of policies of those countries and today you have him run the largest steel company in the world.

    chinese are way too smart!
     
  8. amoy

    amoy Senior Member Senior Member

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    where is a 'free' gift? a partnership can last only when it's for mutual good.

    China is doing it for win-win. or Sino-Pak 'friendship' can't benefit the commoner without such 'substance'.
     
  9. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    At this rate, in the coming 2 decades Islamic Republic of Pakistan would end up as People's Republic of Pakistan, if it keeps getting into loans and investments with just one countries without being able to counter with anything useful. And that is worse for us.. we'd be having 2 Chinas to confront. ///////
     
  10. SHASH2K2

    SHASH2K2 New Member

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    That my friend we already have two people republic of China in neighbourhood and we need to deal with both of them.
     
  11. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    How exactly does it benefit pakistan when assets are bought by china?? They are desperate and broke and chinese are vulture opportunists. The friendship was revealed in the 1.5 million given by the dear friend to the flood victims.
     
  12. amoy

    amoy Senior Member Senior Member

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    Well, back to the context, Chinese investor actually revives the project or it's abandoned. u may call Chinese a vulture but it's not a charity anyway. successful investors seize opportunities and take risks (that could fail), and get return on investment (possibly but not guaranteed).

    besides China gives more than 1.5 million. in addition lots of relief goods ... and also medical teams. just against the backdrop that China herself was suffering from floods/ landslides countrywide.
     
  13. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    who really cares what pakistan gets in bargain, do the pakistanis care?

    ask them even today, who is their all weather friend and almost all of them will shout china even though the US gave them over 200m usd aid as compared to a rather meager aid provided by china at a time when the americans are struggling to get their economy back on track where the attempt is to make sure they should not hit the near zero growth rate levels but the chinese are pacing ahead with growth rate figures with double digit with their forex reserves at close to 2,500b usd compared to that of the US at just 128b usd.

    pakistanis are anyways prone and used to exploitation. earlier up till today the americans did it, tomorrow the chinese will do it and the pakistanis will be more comfortable with the chinese because they will not leave the pakistani occupations as the americans keep doing from time to time. geographical locations and distances do make a difference.

    my sense is that pakistanis are comfortable with the chinese because they both have a common enemy in india and other than that on quite a few other areas their interests converge which makes sure that even when the chinese are interfering in the internal politics/policies and in external policy framing of pakistan people dont quite notice it and as a result dont get offended.

    so at the end of the day no one will really bother even if chinese walk away with all their resources even at a time when there is an energy crunch in that country and you never know, at that point they might just float a few conspiracies about all these resources exploited by the american-israeli-indian agents. its a weird country!
     

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