ISLAMABAD: In a significant move, the Pakistan State Oil (PSO) board has approved up to $3 million for a market study to evaluate the feasibility of a $10 billion green refinery or crude-to-petrochemical complex project.
Pakistani authorities have already announced a new green refinery policy, offering substantial incentives such as a 7.5% deemed duty for 25 years and a 20-year tax holiday, aligning with Saudi Aramco’s preferences. However, Saudi Aramco has shifted its global investment focus away from refineries. Following extensive diplomatic negotiations, Saudi Aramco recommended including the Chinese firm Sinopec as an EPC contractor for the project.
PSO, Sinopec, and Saudi Arabia initially planned a joint market study. However, both Sinopec and Saudi Aramco have now requested PSO to conduct the study first. As a result, PSO will seek an extension from the Special Investment Facilitation Council (SIFC) for the November 24, 2024 deadline to complete the study.
A senior energy ministry official indicated that finalizing the terms of reference (TORs) and completing the bidding process will take approximately three months. Once initiated, the market study will guide Saudi Aramco and Sinopec on their potential involvement in either project.
“The Petroleum Division may assist PSO in securing PPRA exemption for procuring services, enabling PSO to initiate international bidding for selecting a firm for the market study,” the official said. The study, driven by Sinopec and Saudi Aramco, aims to assess the market demand for a green refinery or crude-to-petrochemical complex. Representatives from both companies may be involved in selecting the final bidder to ensure their ownership of the market study.
The official noted that while the market study might cost less than $1 million, the PSO board approved up to $3 million to cover potential supplementary studies and feasibility reports. These reports will determine the most suitable project type and help estimate its cost and capacity.
The market study will also evaluate the domestic consumption and export potential of petroleum products, influencing Saudi Aramco and Sinopec’s decision on the crude-to-petrochemical complex project.
Story by Khalid Mustafa
