Uncertainty Surrounds Pakistan's Refinery Project as Saudi Aramco Expresses Waning Interest
Pakistan, eager to secure investment from Saudi Aramco, has offered a suite of incentives, including reduced taxes, to pique interest in the venture. However, recent indications from Saudi Aramco suggest a diminishing enthusiasm. Citing reduced profitability in refinery investments and a perceived loosening of ties with the Saudi government, the company hinted at a scaled-down investment, from the initially planned $1.5 billion to approximately $900 million.
Karobar
ISLAMABAD: Despite persistent government efforts to persuade Saudi Aramco to participate in a $10 billion state-of-the-art deep conversion refinery project, the global business giant appears lukewarm about the endeavor.
The proposed deep conversion refinery, awaiting approval, boasts the potential to refine an impressive 300,000 barrels of crude oil per day (BPD).
Saudi Aramco communicated that they would no longer take the lead on the project, placing the financial responsibility squarely on Pakistan's shoulders. The company's reluctance to lead the refinery project has left Pakistani authorities in a quandary.
In a surprising shift, Saudi Aramco is now expressing greater interest in constructing a petrochemical complex rather than a refinery. This shift in focus presents a challenge for Pakistani authorities who initially envisioned Saudi Aramco leading the project and facilitating a $7 billion loan.
As Saudi Aramco's commitment wavers, Pakistan is compelled to explore alternative avenues. The government, with a 30:70 equity-to-loan ratio in mind, initially intended to secure $3 billion as equity and $7 billion as loans. An agreement was inked with a Chinese company for the project, involving several Pakistani companies.
Amid the uncertainty with Saudi Aramco, Saudi Arabia has proposed involving the Chinese company Sinopec in the project. Presently, Pakistan is engaged in negotiations with Chinese banks and Sinopec to salvage the project.
In essence, Pakistan's aspirations for Saudi Aramco to invest in their refinery project face hurdles as the global giant exhibits declining interest. The nation is now exploring alternatives, including potential collaboration with a Chinese company. The outcome remains uncertain, with hopes pinned on potential changes post-elections.
