Saudi Aramco is reviewing Pakistan’s engineering, procurement, and construction (EPC)-F mode proposal for Saudi Arabia’s $10.5 billion deep conversion refinery at Hub, Balochistan.
Before entering into a formal agreement, both counties must first sign an agreement followed by numerous contracts such as accords on funding, host government, and security.
According to a national daily, Aramco has finished a pre-feasibility study and will now conduct a feasibility study prior to commencing the project. China would also contribute to the de-risking of Saudi investment.
Pakistan has already adopted and communicated the Green Refinery Policy with big economies. The refining strategy offers a 7.5 percent deemed tariff for 25 years and a 20-year tax break. The project will be installed at Hub, Balochistan, with a capacity of 350,000-450,000 barrels per day.
If a petrochemical complex is added to the project, the cost of the refinery could rise to $14 billion. “No new hydro-skimming refinery shall be allowed to be installed in the country and only brand new deep conversion refinery will be allowed,” according to an energy ministry official.
The $10.5 billion refinery will be developed with a loan-equity ratio of 70:30, with Saudi Aramco sharing 30 percent equity with Pakistan State Oil (PSO) on a 50-50 basis.
Saudi Aramco and PSO would each contribute $1.5 billion in equity, with the remainder financed through EPC loans. It is possible that Saudi Arabia provides the entire 30 percent equity of $3 billion.
Either way, the new green refinery would be permitted to sell its goods to any marketing firm in the country in accordance with the minimum Euro 5 specification issued by the Petroleum Division.
Subject to OGRA clearance, the refinery would be permitted to export surplus petroleum products while refineries may export products with specifications that do not have domestic demand.
