The Shehbaz Sharif government has succeeded in persuading Saudi Arabia to revive a major project shelved during the PTI government and establish a state-of-the-art deep conversion refinery along with a petrochemical complex in Pakistan, a top official at the Energy Ministry.
A high-powered delegation of the kingdom, headed by Crown Prince Mohammad Bin Salman, is coming to Pakistan in the last week of November during which a formal announcement is expected in this regard.
The Pakistani side, according to the report, made huge efforts to persuade the king to honor the MoUs and invest in Pakistan. Islamabad also put its weight behind Riyadh, which has locked horns with Washington over the cut in oil supply in the international market.
Saudi Arabia signed MoUs in February 2019 during Mohammad Bin Salman’s visit to Pakistan for an investment of $21 billion in a number of economic sectors, including the $12 billion deep conversion refinery and petrochemical complex project.
The Saudi oil giant Aramco also conducted a study in this regard which found that setting up a refinery in Gwadar was not feasible. However, it can be established at Hub, Balochistan, or near Karachi, the official said.
Later, when the ties of Imran Khan’s government got strained with Saudi Arabia, the top decision-makers of the kingdom virtually put MoUs of $21 billion on the backburner signed in February 2019, the official said.
According to the source, the Ministry of Petroleum is currently updating the draught for the refining policy in order to attract investment for the construction of new refineries. In addition to broadening the tax holiday’s application, the government is considering offering investors profitability at 14–15% instead of the 9% that was previously promised in the PTI administration’s plan for policy refinement.
The government also wants investment from China for a refinery and to this effect, Prime Minister Shehbaz Sharif, during his upcoming visit to China, will offer Beijing to set up a refinery in Pakistan.
“Top mandarins of the Petroleum Division with input from existing refineries are very much busy upgrading the refining policy draft.” And to this effect, more meetings would be held with stakeholders. One of the top men of the sitting government is spearheading the drive to upgrade the refining policy draft to ensure the setting up of a new refinery of 300,000-400,000 barrels per day by Saudi Aramco.
According to the official, the new refinery will be able to export 35–40% of POL finished product, with the remaining portion being used to meet domestic demand.
In addition, the government is putting $5–6 billion toward the construction of Hub, Balochistan’s Parco Coastal Refinery (PCR), a cutting-edge facility capable of processing 250,000 million barrels of crude oil per day (BPD) of crude oil.
The Government of Pakistan, the official said, will have 60% shares and Abu Dhabi’s International Petroleum Investment Company (IPIC) 30%, and OMV 10%.
Pakistan wants to offload some of its shares to China in PARCO Coastal Refinery at Hub.
The prime minister, during his visit to Beijing, will offer China to become a stakeholder in PARCO-2 and also invite Beijing to install a refinery in Gwadar based on the new refining policy.