Prospects of Pakistan-China energy and economic corridor

Abstract

China's seaborne foreign oil supply through the Strait of Malacca is facing challenges, because of territorial disputes, pirate attacks and geopolitics. The Pakistan–China Energy and Economic Corridor (PCEEC) offers the option of constructing an oil pipeline to bypass the Strait of Malacca. This paper studied the prospects of the PCEEC in the context of the security of China's foreign oil supply chain. We assessed all the existing and proposed oil supply routes from the Middle East and Africa to China's border in terms of supply time frames, costs, energy consumption and GHG emissions. We used weight-based model to estimate the CAPEX, OPEX and per barrel levelized cost of a proposed oil pipeline in the PCEEC. From economic, time, energy and environmental perspective, our assessment suggested that the construction of an oil pipeline in the PCEEC would be compatible with the existing routes and offer the shortest time for transporting oil to China's border. The PCEEC would offer numerous prospects for regional energy and economic connectivity for both countries and the region, including social, economic, commercial and geopolitical benefits.

Keywords: Oil supply challenges, Energy security, Pakistan–China Energy and Economic Corridor (PCEEC), Weight-based model, One Belt-OneRoad