Pakistan oil companies sign MoU to collaborate with Saudi Aramco on $10bn refinery

• Refinery will be jointly developed with Saudi Aramco at Gwadar port.
• Project envisions setting up integrated refinery petrochemical complex.
• Refinery will have processing capacity of 300,000 barrels per day. 

ISLAMABAD: Four leading Pakistani state-owned companies signed memorandum of understanding (MoU) to collaborate on $10 billion Greenfield Refinery project that will be jointly developed with Saudi Aramco at the strategic Gwadar port in Balochistan.

The MoU signing ceremony took place at the head office of Oil and Gas Development Company Limited (OGDCL) on Thursday, according to an official statement.

The Pakistani state-owned entities, Oil and Gas Development Company Limited (OGDCL), Pakistan State Oil (PSO), Pakistan Petroleum Limited (PPL), and Government Holdings Private Limited (GHPL), will collaborate through a joint investment strategy, the statement added.

It said the project will have significant foreign investment from world-class oil and gas giants through equity participation.

The project envisions setting up an integrated refinery petrochemical complex with crude oil processing capacity of minimum 300,000 barrels per day (BPD) along with petrochemical facility in Pakistan.

The integrated refinery petrochemical complex shall comprise of various components such as marine infrastructure, petrochemical complex, storages for crude oil and refines utilities, pipeline connectivity etc.

State Minister for Petroluem Masadik Malik shared details of the project and its benefits to national economy by way of economic growth, foreign exchange savings, energy security, employment opportunities and social upliftment.

Petroleum Secretary Captain (retd) Muhammad Mahmood, in his opening remarks, shared salient aspects of the GreenField Refinery Policy and underscored the commitment of the Petroleum Division towards the development and growth of the Petroleum Sector.

The refinery, which will produce 8 million tonnes of diesel and 6 million tonnes of gasoline with Euro 5 specifications per year, will be established under the newly approved green refinery policy that offers incentives such as a 7.5% deemed duty for 25 years and a tax holiday of 20 years.

The project will be financed on a 30:70 equity-loan ratio, with Pakistan and Saudi Aramco each contributing 15 per cent of the equity. Saudi Aramco, one of the world's biggest oil companies, will lead the project in arranging the loans. Saudi Aramco would provide $1.5 billion as equity and the same amount would be arranged from Pakistan.

The official said the outgoing coalition government had increased the pace of talks with Saudi Arabia for an umbrella agreement to materialize the project, which is expected to boost Pakistan's energy security and reduce its import bill.