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Thursday June 13, 2024

PRL in talks with Chinese contractors, banks for $1.5bn refinery upgrade project

By Tanveer Malik
May 22, 2024
A representational image shows Total Energies employees walking in the Donges oil refinery in Donges, on September 8, 2023. — AFP
A representational image shows Total Energies employees walking in the Donges oil refinery in Donges, on September 8, 2023. — AFP

KARACHI: Pakistan Refinery Limited (PRL) has reached out to Chinese companies for its $1.5 billion Refinery Expansion & Upgrade Project (REUP), aimed at doubling production capacity and enhancing refining capabilities.

Senior management from PRL recently visited China to engage with engineering, procurement, and construction (EPC) contractors and financial institutions, laying the groundwork for the project's forthcoming phases.

“These discussions were highly productive, laying the groundwork for the forthcoming phases of PRL's Refinery Expansion & Upgrade Project (REUP),” PRL said on Tuesday.In January this year, PRL and the United Energy Group of China (UEG) signed a memorandum of understanding (MoU) for an investment worth $1.5 billion; however, since then, no tangible progress has been made on it. Now, the PRL management has visited China to hold meetings with the Chinese companies to collaborate with PRL on this mega opportunity.

The REUP project is a major initiative for PRL, aimed at doubling the refinery's crude processing capacity from 50,000 barrels per day (bpd) to 100,000 bpd. This expansion will be complemented by the adoption of a state-of-the-art Deep Conversion Refinery configuration.

The upgraded refinery will utilize advanced technology to meet stringent environmental standards, including the production of EURO V standard fuels, thereby significantly enhancing PRL's operational efficiency and environmental footprint.

"PRL is ahead of all refineries in Pakistan right now in terms of our Refinery Expansion & Upgrade Project," said Zahid Mir, managing director & CEO of PRL. "The meetings with EPC contractors in China yielded very positive results. We have developed a comprehensive plan to award the EPC contract by the end of this year and work towards achieving financial close of the project by mid-next year. The feedback from these discussions has been overwhelmingly supportive."

In addition to these strategic meetings, PRL has also proactively engaged with the Oil and Gas Regulatory Authority (OGRA) to sign a supplementary agreement.PRL has requested amendments to the existing agreements to align with the updated brownfield policy. This step is crucial for securing the regulatory support needed for the project's successful implementation and long-term sustainability.

The Refinery Expansion & Upgrade Project represents a substantial investment in Pakistan's energy infrastructure. By doubling capacity, producing value-added products, and adhering to international environmental standards, including the production of EURO V compliant MS and HSD, PRL aims to strengthen its position in the global energy market and contribute significantly to the country's economic growth, the company said.