$10bn green refinery: Aramco, Sinopec to decide project’s fate after study by OMC

Saudi Aramco detached itself from the royal government and adopted deregulation to a reasonable extent

By Khalid Mustafa
September 02, 2024
A view of the Saudi Aramco oil facility. — AFP/File
A view of the Saudi Aramco oil facility. — AFP/File

ISLAMABAD: In a new development, Saudi Aramco and Chinese company Sinopec will decide if they will help establish the state-of-the-art mega project of $10 billion green refinery or crude-to-petrochemical complex after the Pakistan State Oil, a government-run Oil Marketing Company (OMC), completes the market study in December this year.

“In the Pak-Saudi Arabia working group meeting held on August 29, PSO disclosed that the market study required by Saudi Aramco and Sinopec will be completed by December this year which will determine the fate of project. The result of the market study will help Aramco and Sinopec to know whether to start the mega project or not,” a senior official, who was part of the meeting, told The News.

In July 2024, the board of Pakistan State Oil (PSO) approved up to $3 million for completing the market study.

The Pakistani authorities have already notified the new green refinery policy, loaded with huge incentives of 7.5 percent deemed duty for 25 years and a tax holiday of 20 years as per the wish of Saudi Aramco. But, later on, Saudi Aramco detached itself from the royal government and adopted deregulation to a reasonable extent. This is why Aramco management is no more inclined to invest in the refinery business across the world, which is no more lucrative like in the past.

However, after hectic diplomatic endeavors, Saudi Aramco asked Pakistani authorities to include Sinopec as an EPC contractor. It was decided that PSO, Sinopec and Saudi Arabia would conduct a joint market study. But later on, both Sinopec and Saudi Aramco pushed PSO to first carry out a market study on its own, and then both entities will decide accordingly.

The feasibility will determine which type of project should be established. This will also help PSO, Sinopec and Saudi Arabia to decide the cost and capacity of the project. “The market study will also assess to what extent petroleum products will be consumed within the country and how much will be exported.”