With an investment of USD 10 billion in the important Gwadar Port, four state-owned petroleum corporations in Pakistan have signed a memorandum of understanding with Saudi Arabia to construct Pakistan's largest oil refinery.
The state-owned Oil and Gas Development Company Ltd (OGDCL), Pakistan State Oil (PSO), Pakistan Petroleum Ltd (PPL), and Government Holdings Private Ltd (GHPL) signed the MoU to work together and give the Saudi company confidence to enter Pakistan with a significant investment. The facility will have a production capacity of 300,000 barrels per day.
The four SOEs would participate in the initiative by investing equity. In order to implement the greenfield refinery project at the important Gwadar Port, the government led by Prime Minister Shehbaz Sharif is said to be in advanced stages of negotiations with Saudi giant Aramco. The government aims to finish the basic paperwork before its term as in office ends in two weeks.
On August 14, the present Pakistani government's term will come to an end. The government recently passed a new policy to help Saudi Arabia's investment in refining. According to it, a new deep conversion oil refinery with a minimum capacity of 300,000 bpd that achieves financial close of the project within five years is eligible for a customs duty of 7.5% for 25 years on gasoline and diesel of all grades produced starting from the date of commissioning of the refinery.
The project calls for the construction of a petrochemical facility and an integrated refinery petrochemical complex with a minimum 300,000 bpd capacity for processing crude oil. The integrated complex must include a variety of elements, including pipeline connectivity, petrochemical facilities, storage for crude oil and refined products, and marine infrastructure.