Pakistan offers China partnership in $9b PARCO coastal refinery

ISLAMABAD: The government has decided to seek investment from China for becoming a shareholder in the state-of-art PARCO coastal refinery and petrochemical complex of $8-9 billion, to be built at Hub, Balochistan.

In addition, Islamabad has also asked Beijing to invest in projects, including upgradation of existing refineries, setting up of underground gas storages, exploration and production activities and national seismic surveys in frontiers and hard areas, such as some pockets of Balochistan and bordering areas of Pakistan and Afghanistan.

And now in the next 10th Pak-China JCC meeting, the PARCO coastal refinery project among others is the main project on part of Pakistan that will be included in the agenda. More importantly, projects like LNG storages and exploration and production projects will be also offered to China in the 10th JCC meeting. “Pakistan wants the investment in refinery, exploration & production activities and LNG storages projects from China under the CPEC umbrella and seismic surveys in frontiers and hard areas.”

Earlier, Special Assistant to Prime Minister Nadeem Babar also wrote a letter to Ambassador of Kingdom of Saudi Arabia in Pakistan Nawaf Saeed Al-Maliky on September 2020, inviting Saudi Arabia to become a partner with PARCO in installing the PARCO coastal refinery of 2,500,000 BPD. It is worth mentioning that the Saudi envoy, some days back in a meeting with SAPM on Petroleum, responded to the letter saying that his country Saudi Arabia will positively consider the offer.

Meanwhile, in a positive development, the Government of Balochistan has granted NOC for development of 1,811 acres of land on 27 September 2020 and to this effect, a 30-year lease agreement has been signed by PARCO and PERAC for the project. And further discussions are underway regarding acquisition of additional land of 1,000 acres near Hub, Baluchistan. To a question, the official said that a feasibility report about the PARCO refinery and petrochemical complex is nearing completion. Prime Minister Imran Khan is likely to inaugurate in April-May, 2021 initiation of work on the oil terminal, worth $700-800 million, at site of the proposed PARCO refinery at Hub. The official said that the Petroleum Division is working to make the POL tariff regime attractive enough to ensure maximum investment in the refining sector as currently the tariff of crude oil is at higher side and finishing products have no competitive tariff structure.

More importantly, PARCO Coastal Refinery Limited (PCRL) has been incorporated as a 100pc subsidiary of PARCO. And the Government of Pakistan has announced various incentives for development of green field refinery projects, including exemption from all taxes for a period of 20 years from the date of commercial production.

The refinery configuration study has been completed by Honeywell (UOP, USA) and the feasibility study updation done by Jacobs Consultancy.

More importantly, the execution strategy and governance structure has been approved and the Government of Pakistan has already accorded approval to incentives for new refinery projects and the project site studies have been completed, including land survey. Hydrology study, geotechnical offshore investigation, offshore data acquisition have also been completed.

The official said that Technip FMC has been appointed as the Project Management Consultant and project organization has been developed and relevant human resources engaged. Allen & Overy has been appointed as International Legal Adviser and the revised market study has been updated and project cost update has been finalized. Also, the International Financial Advisers have been shortlisted. The Front End Engineering Design (FEED) contractors have also been shortlisted. The Invitation to Bid (ITB) is under preparation for issuance to the shortlisted contractors.