Saudi Arabia shelves $10 billion oil refinery project

Aftab Ahmed

Saudi Arabia has shelved a plan of setting up a refinery worth $10 billion in the oil city of Gwadar Port.

Saudi Arabia had announced to invest $20 billion in Pakistan during a visit by King Salman in February this year. Out of this, it pledged to invest $10 billion to set up a refinery in the oil city of Gwadar.

Pakistani side had also welcomed this investment. China was a major stakeholder in Gwadar. The Pakistani side also took China into confidence, which had agreed to the participation of a third country in CPEC.

So, under a plan, Saudi Arabia announced setting up a refinery in Gwadar’s oil city. Pakistan and Saudi Arabia had formed a working group that was also set up to monitor the progress.

In September last year, Saudi Arabia had announced to make progress on $20 billion investment commitments before the next meeting of the Pak-Saudi Supreme Coordination Council.

Saudi Arabia Deputy Minister of Energy Khalid Saleh Al-Modaifer had informed media that the projects required time and studies to expedite work on them.

https://newztodays.com/pakistan-requests-saudi-arabia-to-extend-oil-deferred-payment-facility/

He had visited Pakistan to review progress on the memorandums of understanding (MoUs) signed during the visit of Saudi Crown Prince Mohammed Bin Salman.

Partnership with Parco

It will now make a joint venture with Pak Arabi Refinery Limited (Parco) to set up Coastal Refinery in the Balochistan area of Pakistan.

Parco is the largest oil refinery with 100,000 barrels per day capacity. Saudi Arabia exports crude oil to meet Parco’s requirements.

Pakistan needs a refinery with a refinery capacity of 400,000 barrels per day. Officials said that Pak Arab Refinery Limited (Parco), a joint venture of Pakistan and Abu Dhabi, set up Khalifa coastal refinery in Pakistan. The government was negotiating with the Balochistan government on the issue of acquiring land.

Officials said that Pakistan needs one refinery with 400,000 barrels refinery. Parco is setting up a refinery with 400,000 barrels per day in the coastal area of Balochistan. Therefore, Saudi Arabia had decided to participate in this project rather than setting up a separate refinery in the oil city of Gwadar.

Work stalled on Khalifa Refinery Project.

The UAE government had decided to establish Khalifa Refinery with a $6 billion investment in Balochistan’s coastal area. However, the UAE had shelved this project following a tussle.

PPP government wanted Managing Director Rasheed Jung to remove, but UAE was not ready. So, the UAE government was shelved after a row with the PPP government.UAE had also cited another reason for circular debt for scrapping a project.

Resumption of work on Refinery

In 2016, the UAE government decided to revive the $6-billion Khalifa Coastal Refinery project.

Under a fresh plan, UAE and PML-N government decided that Pakistan Arab Refinery Limited (Parco) would start work on the Khalifa refinery with 250,000 barrels per day. In Parco, UAE holds 40% shares, whereas Pakistan’s government has a 60% stake.

Pakistan is meeting 70 percent of all requirements of petrochemicals through imports. However, the Khalifa refinery but Khalifa refinery would produce them in the country.