According to a senior official at the Energy Ministry, the coalition government led by Prime Minister Shehbaz Sharif has ultimately been successful in convincing Saudi Arabia to install a cutting-edge deep conversion refinery and petrochemical complex in Pakistan, a project that the KSA shelved during the PTI government.
According to the official, perhaps in the final week of November, a powerful group from the Kingdom of Saudi Arabia, led by the Crown Prince, will visit Pakistan. The invitation to visit Pakistan was extended by Prime Minister Shehbaz Sharif. The Pakistani side put a lot of effort into convincing the KSA to respect the MoUs and invest in Pakistan. The current Pakistani administration has also sided with Saudi Arabia in its dispute with the United States over the reduction in oil supply on the world market.
It’s interesting to note that the Kingdom of Saudi Arabia signed MoUs in February 2019 to spend $21 billion in a variety of economic sectors, including a $12 billion project for a deep conversion refinery and petrochemical complex. The aforementioned Memoranda of Understanding were signed in February 2019 during a visit to Pakistan by Crown Prince of Saudi Arabia Mohammad bin Salman, when Pakistan’s Prime Minister at the time was Imran Khan Niazi.
A feasibility study was also carried out by Saudi Aramco, and it was concluded that building a refinery in Gwadar was not practical. However, the official claimed that it may be installed in Hub, Balochistan, or close to Karachi.
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 scope of the tax break, the government is considering offering investors profitability at 14–15 percent, up from the former offer of 9 percent in the draught for refining policy developed by the PTI government.
Prime Minister Shehbaz Sharif will propose Beijing building a refinery in Pakistan during his future visit to China in order to fulfil the government’s desire for Chinese investment in a refinery.
“Top Petroleum Division officials are hard at work updating the refining policy draught with input from current refineries.” More stakeholder meetings would be held as a result of this. One of the key officials in the current administration is leading the effort to improve the refining policy draught in order to assure that Saudi Aramco would build a new refinery capable of processing 300,000–400,000 barrels per day. 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.
Another modern, deep-conversion refinery, the Parco Coastal Refinery (PCR), with a capacity of 250,000 million barrels per day (BPD) of crude oil refinement, is also being built by the government near Hub, Balochistan.
According to the official, the Government of Pakistan will own 60% of the company, together with 30% from the International Petroleum Investment Company (IPIC) of Abu Dhabi and 10% from OMV. Pakistan intends to sell some of its PARCO Coastal Refinery at Hub shares to China. The prime minister will encourage Beijing to build a refinery in Gwadar based on the new refining policy and offer China the chance to invest in PARCO-2 during his visit to Beijing.
