PAKISTAN has reached an agreement with Singapore's PSA International to transfer operational control of their Gwadar deep-water port to a Chinese company, reported London's Financial Times.

The port, which was built in part with a loan from China, is close to the Strait of Hormuz and the Pakistan-Iran border, and as such the deal will be closely watched by the US.

The port, which was also built by China Harbour Engineering Company, had a total investment of US$248 million, $198 million of which came from China. PSA began running the port five years ago as part of a 40-year contract.

Part of the reason for the transfer has been Pakistan's inability fulfil promises to PSA, including building a road to the port to aid in service operations.