Pakistan State Oil (PSO) has initiated talks with Chinese energy giant Sinopec to join hands with Saudi Arabia’s Aramco in establishing a cutting-edge refinery and petrochemical complex in Pakistan. The government is considering incorporating the $10 billion Saudi Aramco refinery project into the framework of the China-Pakistan Economic Corridor (CPEC).
In a letter addressed to Sinopec’s President Yu Baocai, PSO’s Managing Director/CEO Syed Muhammad Taha expressed PSO’s interest in inviting Sinopec to participate in this significant venture. The project, a collaboration between PSO and Saudi Aramco, aims to build a refinery and petrochemical complex with a processing capacity exceeding 300,000 barrels per day. It is designed to produce various high-value petroleum products, including gasoline, diesel, and jet fuel, alongside petrochemicals.
Taha highlighted the favorable incentives offered by the Government of Pakistan to enhance the project’s economics, 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 and materials.
Given Pakistan’s growing population and expanding economy, with energy demand expected to double by 2035, Taha emphasized the compelling investment case for Sinopec in the country. He underscored Sinopec’s proven track record in the energy sector and its technical expertise, operational excellence, and financial strength, which are crucial for the success of such a large-scale project.
PSO and Aramco view Sinopec as the ideal partner for the venture, given its extensive experience in refinery and petrochemical projects and its existing collaborations with Aramco in China and Saudi Arabia. Taha invited Sinopec to express interest in participating as an equity and technical partner, exploring various partnership models.
Furthermore, the government is considering drafting a new policy framework to facilitate investment from Aramco in establishing a crude-to-chemical/plastic complex in Pakistan. This decision was made at a meeting presided over by the caretaker Prime Minister, Anwaar-ul-Haq Kakar. The Petroleum Division and Ministry of Industries and Production will work together to develop the policy framework in collaboration with Sinopec Engineering Group (SEG). Saudi Arabia anticipates Sinopec’s involvement as an equity investor along with EPC (Engineering, Procurement, and Construction) and O&M (Operations and Maintenance) services.
(Story by Mushtaq Ghumman)
