Pakistan and Saudi Aramco are agreed to sign a $10b 400000-barrel Refinery project in Hub Balochistan.
Pakistan and Saudi Arabia to finalise $10b refinery project.
According to sources, Saudi firm Aramco initially refused to provide full equity in the multi-billion dollar refinery project, prompting the Pakistani government to decide on a joint venture with Pakistan’s major state-owned companies. Under this project, Pakistan State Oil (PSO), Pak Arab Refinery (PARCO), Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Private Limited (JHP) L) will contribute 70% equity and remaining 30% will be the initial contribution of Aramco.
The MoU will be signed on Thursday (today) to finalize the cooperation to further strengthen the partnership between the two countries. Despite past tensions between Pakistan and Saudi Arabia that have pushed the project, Pakistani officials are actively working on it and even the Saudi ambassador to Pakistan has visited the site of the proposed refinery.
This project faced challenges previously, However, the current Pakistani government, supported by the Army Chief, is promoting investment in Pakistan to attract foreign investment.
This project has proposed a 400000-barrel refining capacity per day. The government of Pakistan has already approved a refinery policy for new projects in the country, which includes tax breaks to encourage investors to set up refineries. However, it is yet to adopt a refinery policy to facilitate the setting up of upgrading plants for existing refineries. Existing refineries in Pakistan claim that they can meet the country’s fuel demand if concessions are given for their expansion under the new refinery policy.
Apart from economic benefits, this partnership is of strategic importance in strengthening friendly relations with Saudi Arabia and the United Arab Emirates (UAE). To help secure an International Monetary Fund (IMF) bailout package, both countries supported Pakistan previously
Pakistani authorities have recently awarded one terminal to the United Arab Emirates and plans are underway to award two more terminals in Karachi. These measures are not only focused on attracting investment but also aim to strengthen bilateral relations with these two Muslim countries.
Teams from Pakistan and Saudi Arabia have been working together since last year to finalize a commercial deal on the refinery project, especially ahead of Prime Minister Shahbaz Sharif’s visit to Riyadh.
The potential project was first announced in January 2019 during Saudi Arabia’s Energy Minister Khalid al-Falih’s visit to Pakistan. The Arab nation expressed its intention to set up a $10 billion oil refinery in Gwadar, a strategic deep-water port in Pakistan. However, the project faced financial sustainability challenges, as a result of which it was shelved for a period.
As Pakistan and Saudi Arabia move closer to strengthening the agreement, it opens up opportunities for increased economic cooperation and mutual benefit. The successful implementation of this project can be a milestone in their bilateral relations and can promote strong economic relations between the two countries.
In February 2019, during the visit of Saudi Crown Prince Mohammed bin Salman to Pakistan, an investment package of 20 billion dollars was announced, in which 10 billion dollars were allocated for the construction of a mega oil refinery in Gwadar. However, the $3.2 billion bailout package was withdrawn due to differences with the Pakistan Tehreek-e-Insaf (PTI) government.
After the Arab country offered to provide incentives for new refinery projects, the Petroleum Division accelerated work on a new refinery policy, which in turn revived Saudi Arabia’s interest. Pakistan and Saudi Arabia are now signing a multibillion-dollar deal for a long-pending refinery project, signaling a major development in their bilateral ties.
Officials say PARCO, with a current capacity of 100,000 barrels per day, is Pakistan’s largest oil refinery, adding that the 400,000-barrel-per-day refinery is important to meet the country’s growing oil demand. Is. At present, crude oil exports from Saudi Arabia are required to meet PARCO’s requirements.
Industry experts believe that if the existing refineries are expanded to 400,000 barrels and an additional refinery with the same capacity is established, it will be able to meet the country’s fuel demand by 2040.
This article was posted in Www.allupdatenews.com on 28-07-2023