ISLAMABAD: Aramco, a Saudi Arabian oil group, is currently evaluating Pakistan’s proposal for a deep conversion refinery, which follows the Engineering, Procurement, Construction (EPC)-F mode and is being built in the Gulf country. will, a senior energy ministry official told The News.
The official added that before formalizing the agreement, the two countries will have to sign a charter of commitments. This will be followed by various agreements involving financing, host government, and security agreements.
“Pakistani authorities are in touch with KSA counterparts for an umbrella agreement,” the official said.
A pre-feasibility study and marketing review have been completed by the Saudi Oil Group, and the next phase involves conducting a front-end engineering design (FEED) to assess the project’s feasibility before embarking on a major project. .
China is also expected to help reduce the risks of Saudi investment.
Pakistan has already approved the Green Refinery Policy and shared it with the capitals of major economies. The refining policy is very attractive, with 7.5 percent deemed duty for 25 years and a tax holiday of 20 years.
The project will be set up in Hub, Balochistan, with a refining capacity of 350,000-450,000 barrels per day.
The $10.5 billion refinery will be built under a 70:30 loan-equity ratio and Saudi Aramco will share 30 percent equity with Pakistan State Oil on a 50 percent basis. “KSA can provide 100% equity. And 70% of the project cost is to be arranged through loans,” the official said.
If the petrochemical complex was added to the project, the cost of the refinery could increase from $10.5 billion to $14 billion because it would require the addition of at least one new (greenfield) 300-400k bpd deep conversion refinery and associated petrochemical complex. Required. Import terminal and pipeline infrastructure to meet future demand.
“No new hydro-skimming refinery will be allowed to be installed in the country and only a brand new deep conversion refinery will be allowed,” the official said.
Aramco is a serious player, due to which various financial institutions will easily come up with loan offers. Saudi Arabia wants China to be part of the project and build it, and Chinese banks are also willing to lend to the project. EPC mode may become EPC-F (Financing) mode.
Saudi Aramco and PSO will finance $3 billion in equity ($1.5 billion each) and the rest will be arranged through loans under the EPC mode. However, there are chances that Saudi Arabia will provide the full 30% equity of $3 billion.
The new green refinery will be allowed to sell to any marketing company, including their own affiliates in the marketing and distribution sector in the country, as per minimum Euro 5 specifications notified by the Petroleum Division from time to time.
The refinery will be allowed to export petroleum products in excess (with respect to domestic demand) subject to OGRA approval. However, refineries may export products that do not meet local demand, subject to notification to OGRA and MEPD.
There are currently five companies operating in the oil refining sector in Pakistan: Pak Arab Refinery Limited (PARCO), Attock Refinery Limited, National Refinery Limited, Pakistan Refinery Limited and Cnergyico Pk Limited.
All refineries except PARCO are based on old, hydro-skimming technology. PARCO is a mild conversion refinery, and even that is more than 20 years old now.
The product slate of all existing local refineries typically includes naphtha, motor gasoline (petrol), high speed diesel (HSD), furnace oil (FO), kerosene, jet fuel (JP-1 and JP-8), high octane. consists of. Blending Components (HOBC), Liquefied Petroleum Gas (LPG) and Light Diesel Oil (LDO).
Pakistan’s oil refining capacity is about 450,000bpd, equivalent to 20 million tonnes per annum. As against the refining capacity of 20 million tonnes, the actual capacity utilization is around 11 million tonnes. This is mainly due to the reduction in FO demand in the country as a result of the change in the energy mix in the power sector.
It should be noted that the essence is that the production slate for the refineries is fixed. That is, they cannot produce MS or HSD alone. All products are manufactured simultaneously.
Thus, as FO demand declines, refineries have to reduce their overall production and struggle to maintain their throughput at optimal levels. Pakistan’s demand for MS and HSD is expected to reach 33 million tonnes per annum (mtpa) by 2035, according to a forecast by an international consultant.
Pakistan imports a significant amount of petrochemicals worth more than $2 billion annually, as Pakistan does not have any basic petrochemical production facilities. Petrochemical consumption includes thermoplastics and thermosetting resins.
In the thermoplastics category, polyethylene (PE) and polypropylene (PP) have major consumption.
At present, Pakistan’s petrochemical industry is limited to the production of polyvinyl chloride (PVC), polystyrene (PS), synthetic fibers (ie, polyester), and the production of purified terephthalic acid (PTA) and polyethylene terephthalate PET resins.
The country has no production of any basic petrochemicals ie ethylene, propylene etc.
