Saudi Arabia and Pakistan held technical discussions to agree on the requirements for a brand-new deep conversion refinery that the kingdom plans to build. The initiative will be unveiled during Saudi Crown Prince Mohammad Bin Salman’s upcoming trip to Pakistan.
While in Saudi Arabia last month, Prime Minister Shehbaz Sharif held discussions about the $21 billion MoUs, the refinery project, and the $10 billion petrochemical complex that had been signed in February 2019. However, the petrochemical complex is no longer included in the proposal under the current scenario. According to a senior official involved in the Abu Dhabi talks, the refinery will now only be configured with the ability to refine 350,000 to 400,000 barrels of crude oil per day.
“Pakistan delegation is being headed by Musadik Masood Malik, Minister of State, and comprises the secretary of petroleum, secretary of the board of investment, MD PSO, MD PARCO, and other sector officials of the Petroleum Division. The KSA is being represented by the Saudi energy minister and Saudi ARAMCO officials.”
“Both sides seek to resolve all of the mega project’s technical issues and requirements. The refinery that will be built in the nation’s capital will have extra stakeholders in addition to Saudi Aramco as its major shareholder.
For the new refinery, which will have a 16% profitability, a 20-year tax holiday, and a six-year period of protection duty, the government has already amended the draft of its refining policy. The official stated that the Pakistani delegation is conversing with the KSA team over an open-ended policy.
“In case, KSA asks for more incentives, then the Pakistan side would not hesitate in considering and accommodating them.” The official said that the new refinery will be able to export 35-40% of Pakistan Oilfields Limited (POL) finished product and the rest will be used to cater to the country’s needs.
He claimed that Saudi Aramco had previously conducted its feasibility study and discovered that building a refinery in Gwadar is not practical. However, if it is installed in Karachi or Hub (Balochistan), which is equally close to Karachi, it is feasible. The official stated that China might also participate in the mentioned refinery.
According to the official, the UAE government is hesitant to build its coastal refinery (PCR-2) at Hub and the nation wants the KSA to provide a significant investment in the new refinery of 350,000–400,000 BPD with more stakeholders in the project.
A delegation from Pakistan is also in talks with the Abu Dhabi National Oil Company (ADNOC) about meeting the nation’s energy demands.
