OGDCL, PSO ink agreement for ‘greenfield refinery project’ in Balochistan

Pakistan’s E&P giants Oil and Gas Development Company Limited (OGDCL) and Pakistan State Oil (PSO) signed a Memorandum of Understanding (MoU) for cooperation/collaboration and joint investment strategy for setting up a greenfield refinery project in Balochistan under a consortium arrangement with foreign investors.

The development was shared by OGDCL in a notice to the Pakistan Stock Exchange (PSX) on Thursday.

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“It is informed that a MoU has been signed between the Oil and Gas Development Company Limited (OGDCL) and Pakistan State Oil (PSO) on July 27, 2023 agreeing on cooperation and collaboration and a joint investment strategy for setting up a Greenfield refinery project in Baluchistan under a consortium arrangement with foreign investors,” read the notice.

OGDCL said that the project will benefit from the incentives offered by the government of Pakistan under the Pakistan Oil Refining Policy for New/Greenfield Refineries, 2023 and provide an opportunity to OGDCL for vertical integration in the oil and gas sector.

The new refinery policy aims at incentivising greenfield investment in shallow, deep conversion, and ultra-deep conversion new refineries upto 20 years.

Back in May, Minister of State for Petroleum Musadik Malik disclosed that the refinery policy would help accelerate the required energy growth which is pivotal for economic growth.

The new refinery policy has 20 years’ incentives for 300,000 tons capacity refinery and 10 years below 300,000 tons refinery but it will be mandatory that the financial closure be within five years.

The import duty on the equipment used in the refinery on 300,000 and above would be 7.5% on MS and diesel for 20 years and the same incentives will be applicable for 10 years on below capacity of 300,000 new refineries.

Both types of refineries would be incentivised as per special economic zone (SEZs) laws, he had said.