Pakistan State Oil (PSO) is initiating discussions with Chinese energy giant Sinopec to forge a partnership with Saudi Arabia’s Aramco for the development of an advanced refinery and petrochemical complex,
The government is contemplating incorporating the $10 billion Saudi Aramco refinery project into the framework of the China-Pakistan Economic Corridor (CPEC).
In a letter addressed to the President of Sinopec Corp, Yu Baocai, the Managing Director/CEO of PSO, Syed Muhammad Taha, expressed PSO’s interest in inviting Sinopec, renowned for its global leadership in the energy sector, to participate in a significant greenfield refinery and petrochemical endeavor in Pakistan.
Taha emphasized that this joint venture between PSO and Saudi Aramco aims to establish a cutting-edge refinery and petrochemical complex in Pakistan. The project, as per a pre-feasibility study, is envisioned to possess a processing capacity exceeding 300,000 barrels per day (bpd), producing a diverse range of high-value petroleum products, including gasoline, diesel, and jet fuel, alongside petrochemicals.
Furthermore, Taha highlighted the various incentives offered by the Government of Pakistan to enhance the project’s viability, including a 20-year tax holiday, deemed duties of 7.5% for 25 years on gasoline and diesel production, and exemptions from taxes on imported equipment/materials.
Positioning Pakistan as an attractive investment destination, Taha underscored the country’s burgeoning energy demand, poised to double by 2035, driven by a population of over 220 million and a rapidly expanding economy. This presents a lucrative opportunity for Sinopec to establish a strong presence in a strategically vital market.
In his letter, Taha expressed confidence in Sinopec’s suitability as the project’s partner due to its distinguished track record and extensive expertise in refinery and petrochemical ventures. Sinopec’s financial strength and access to capital are deemed essential for financing this ambitious project.
Moreover, Taha invited Sinopec to express interest in participating as an equity and technical partner, exploring diverse partnership models such as joint ventures, build-operate-transfer agreements, and technology licensing.
In parallel, the government is considering formulating a new policy framework to facilitate investment from Saudi Aramco, with a focus on establishing a crude-to-chemical/plastic complex. This decision was deliberated during a recent meeting of the Apex Committee of the Special Investment Facilitation Council (SIFC), chaired by caretaker Prime Minister Anwaar-ul-Haq Kakar.
The Petroleum Division and Ministry of Industries and Production (MoI&P) will collaborate on drafting the policy framework to attract investment from Aramco in conjunction with Sinopec Engineering Group (SEG), a representative Chinese firm. Discussions on the $10 billion project have commenced, with Saudi Arabia anticipating Sinopec’s participation as an equity investor alongside EPC (Engineering, Procurement, and Construction) and O&M (Operations and Maintenance) roles.
