AC has directed Pakistan’s ambassador to Saudi Arabia to engage with Saudi Aramco Refinery Project and provide updates on their current status of interest in refinery project.
The Apex Committee (AC) of the Special Investment Facilitation Council (SIFC) has directed Pakistan’s ambassador to Saudi Arabia to engage with the Saudi Aramco Refinery Project and provide updates on their current status of interest in the refinery project, according to well-informed sources reported by media.
The AC has not only focused on Saudi Aramco but has also directed the Petroleum Division to evaluate the investment interests of other potential parties in the project.
This move is part of a broader strategy as Pakistan aims to bridge the gap between local refining production and the projected demand for petroleum products, which is anticipated to reach around 9 Million Tons Per Annum (MTPA) by 2030, increasing to 14 MTPA by 2035 in the Brown/Green Field refinery sector.
Currently, Pakistan imports 50 percent of its Mogas (petrol) and High-Speed Diesel (HSD) requirements, with annual increases projected at 4 percent for Mogas and 2.7 percent for diesel. The Petroleum Division has highlighted the necessity for a new refinery, with a capacity of approximately 350,000 barrels per day (15 MTPA), configured to maximize Mogas production.
Grace Refinery Limited (GRL) and Falcon Oil Refinery (Pvt) Limited have already expressed their interest in the project, prompting the formation of a committee comprising representatives from the Oil and Gas Regulatory Authority (OGRA), Petroleum Division, Pakistan State Oil (PSO), and a refinery expert. This committee will conduct a thorough evaluation of the proposals, with results to be presented in the next Executive Committee (EC) meeting of the SIFC.
In a bid to facilitate business and investment, the SIFC has also approved a business-friendly visa facility. Simultaneously, the Executive Committee has directed the Secretary Petroleum to update on decisions made by the Cabinet Committee on Energy (CCoE) regarding policy amendments.
The goal is to eliminate obstacles for Brownfield investors and approve revised timelines for the execution of upgraded agreements between refineries and OGRA, with these updates to be presented in the upcoming EC meeting.
Furthermore, the Final Investment Decision (FID) for the Energas LNG Terminal is contingent on resolving outstanding matters, including the signing of a Gas Transportation Agreement (GTA) with Sui Northern Gas Pipelines Limited (SNGPL), exemption from Third Party Access, and a 5-Year Federal Board of Revenue (FBR) tax exemption. The Petroleum Division has been tasked with finalizing draft amendments for exemption from Third Party Access.
Addressing the financial dynamics of the energy sector, the SIFC was apprised that the federal government contributes a subsidy of approximately Rs 20 billion on LNG for fertilizer plants. A decision was made to form two committees to devise firm recommendations on sharing the burden of this subsidy among provinces, considering agriculture as a provincial subject. These recommendations are expected to be presented in the next EC meeting.
In the realm of international partnerships, the inclusion of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project in the Foreign Investment Promotion and Protection Act (FIPPA) 2022 has been highlighted.
Legal and commercial experts are engaged to evaluate the alignment of existing commitments under the Gas Pipeline Framework Agreement (GPFA) and Host Government Agreement (HGA) with the incentive package under FIPPA. The Petroleum Division has been directed to conclude all agreements by December 31, 2023.
Finally, the Executive Committee was briefed on the inclusion of the Reko Diq ongoing evaluation process with Manara minerals and the draft infrastructure plan for the Chagai-Gwadar Corridor. The Secretary Petroleum has been tasked with presenting the updated status of Reko Diq and the draft infrastructure plan in the next EC meeting.
These strategic moves underscore Pakistan’s commitment to ensuring energy security, attracting investments, and fostering a business-friendly environment in the evolving landscape of its energy sector. The developments within the SIFC and EC meetings signal a proactive approach to addressing challenges and seizing opportunities in the dynamic energy market.