The construction of Saudi Aramco’s $10 billion Greenfield Refinery project at the Gwadar Port is stalled despite Pakistan announcing a new policy that offers 7.5 percent deemed duty for 25 years and a 20-year tax holiday in accordance with the wishes of the Kingdom of Saudi Arabia.
In recent meetings with Pakistani authorities, top Saudi Aramco officials suggested that the company has achieved reasonable deregulation and this is why it is less eager to invest in the global refinery sector, with the refinery business not as profitable as it used to be, reported TheNews.
Pakistan has been discreetly signaled by Aramco that it may decrease its equity in the refinery to $900 million. The oil producer has also made it known that it will not lead the project and the Government of Pakistan will be responsible for arranging any outstanding funding it requires.
Aramco has also expressed an interest in establishing a petrochemical complex rather than a refinery, putting the authorities in a bind. However, the results of the upcoming General Elections in February 2024 could change the situation altogether.
It bears mentioning that the previous government signed an agreement with China Road and Bridge Corporation on July 27, 2023, under which the firm will participate in the refinery as a contractor and obtain a suitable amount of loans from Chinese banks for the megaproject.
On the same day, July 27, four additional deals were signed on the Pakistani side, under which Pakistan State Oil would have a 25 percent stake in the country’s $1.5 billion equity, while OGDCL, PPL, and GHPL would each have a 5 percent stake.
Saudi Arabia at the time requested Pakistani authorities to approach China’s Sinopec and include it in the green refinery to be built in Pakistan.
Sinopec provides Saudi Arabia with services like rigs, well-service, geophysical exploration, pipelines, roads and bridges, and other projects. The company has an excellent reputation among Saudi companies like Aramco, SWCC, RC, and many Saudi cities.