PSO board approves up to $3m for market study

ISLAMABAD: In a major development, the board of Pakistan State Oil (PSO) has approved up to $3 million to be earmarked for initiating and completing the market study to exactly know whether to start the mega project of a $10 billion green refinery or crude-to-petrochemical complex.

Pakistani authorities have already notified the new green refinery policy loaded with huge incentives of 7.5 per cent deemed duty for 25 years and a tax holiday of 20 years as per the wishes of Saudi Aramco. Now, Saudi Aramco seems no more inclined to invest in the refinery business across the world as it is no more lucrative as it was in the past.

However, after hectic diplomatic efforts, Saudi Aramco asked Pakistan’s authorities to include the Chinese firm -- Sinopec -- as an EPC contractor. It was decided that PSO, Sinopec, and Saudi Arabia would conduct a joint market study. However, under the latest scenario, both Sinopec and Saudi Aramco were pushing PSO to first carry out a market study, and then both entities will decide accordingly.

“We have to seek an extension in the deadline of completing the market study from the Special Investment Facilitation Council (SIFC), which had set the date of November 24, 2024, as the deadline for completing the study.”

The official said that the process to finalize terms of references (TORs) and completing the bidding process will take at least three months, and after that, the market study will be initiated.

The PSO board has now approved the amount of up to $3 million for market study. The study will also pave the way for the future course of action for Saudi Aramco and Sinopec to decide if they become part of any of the two projects or not.

“The Petroleum Division may help PSO in seeking PPRA exemption for procurement of services so that PSO initiates steps for holding international bidding for selecting the firm for initiating market study,” a senior official of the energy ministry told The News. “The study is being carried out at the insistence of Sinopec and Saudi Aramco to know whether there is an appetite for the green refinery or crude-to-petrochemical refinery or not. Both foreign entities may have representation in the committee, which will select the final bidder for market study after getting international bids so that Sinopec and Saudi Aramco have the ownership of market study.”

To a question, the official said that the market study may cost less than $1 million. However, after the market study, PSO may also have to conduct a supplementary study and a feasibility report, which is why the board has approved a $3 million amount. The feasibility report will determine which type of project should be established. This will also help PSO, Sinopec, and Saudi Arabia decide the cost and capacity of the project.

To a question, the official said that the market study will also assess how much petroleum products will be consumed within the country and how much will be exported. Likewise, both Saudi Aramco and Sinopec will decide the fate of the crude-to-petrochemical complex project after the completion of the market study.