Refinery, petrochemical complex: PSO taps China’s Sinopec for partnership with Aramco

ISLAMABAD: Pakistan State Oil (PSO) has approached Chinese energy firm M/s Sinopec to partner with Saudi Arabia’s Aramco in a state-of-the-art refinery and petrochemical complex in Pakistan, well-informed sources told Business Recorder.

The government is also likely to include $10 billion Saudi Aramco refinery project in framework of the China-Pakistan Economic Corridor (CPEC).

In a letter to President Sinopec Corp, Yu Baocai, Managing Director/Chief Executive Officer, PSO, Syed Muhammad Taha, conveyed PSO’s interest in inviting Sinopec, a global leader in the energy sector, to participate in a major greenfield refinery and petrochemical project in Pakistan.

PSO in 1HFY24

According to the PSO chief, the project presents a unique opportunity for Sinopec to leverage its extensive expertise and resources in a high-growth market with significant potential.

“It is a joint project between PSO and Saudi Aramco that aims to establish a state-of-the-art refinery and petrochemical complex in Pakistan. As per pre-feasibility study, the project will have a processing capacity of more than 300,000 barrels per day (bpd) and will produce a range of high-value petroleum products, including gasoline, diesel, jet fuel with provision of petrochemicals, “said Syed Muhammad Taha.

According to Managing Director PSO, the project has been incentivized by the Government of Pakistan to improve its economics, which includes 20-year tax holiday, 7.5% deemed duties for 25-years on its gasoline and diesel production, and exemption from all taxes on the import of any equipment/material for the project.

He maintained that Pakistan presents a compelling investment case for Sinopec, adding that with a growing population of over 220 million and a rapidly expanding economy, the country’s demand for energy is expected to double by 2035. This presents a significant opportunity for Sinopec to secure a strong foothold in a strategically important market.

“We, PSO and Aramco, believe that Sinopec is the ideal partner for this project due to its proven track record,” he continued.

As a leading global energy company with extensive experience in refinery and petrochemical projects, Sinopec possesses the technical expertise and operational excellence necessary to ensure the success of this initiative. In addition, Sinopec’s strong financial position and access to capital will be crucial for financing this large-scale project.

“We invite Sinopec to express interest in participating in this project as an equity and technical partner. We are open to exploring various partnership models, including joint ventures, build-operate-transfer agreements, and technology licensing,” said Syed Muhammad Taha in his letter.

The government is also likely to draft new policy framework to facilitate investment from Saudi Arabia’s energy giant M/s Aramco, which has now shown interest in establishment of crude to chemical/plastic complex.

The decision was taken at a recent meeting of Apex Committee of Special Investment Facilitation Council (SIFC), presided over by the caretaker Prime Minister, Anwaar-ul-Haq Kakar.

According to sources, Petroleum Division and Ministry of Industries and Production (MoI&P) will jointly develop policy framework to attract investment of M/s Aramco in collaboration with Chinese firm Sinopec Engineering Group (SEG). Pakistan’s Deputy Ambassador to China has recently held meeting with the representatives of Chinese company and discussed the pros and cons of $ 10 billion project.

Saudi Arabia, sources said, points out that M/s Aramco is doing several joint projects with Sinopec in China, as well as in KSA and therefore is expecting Sinopec as equity investor along with EPC plus O&M.

Copyright Business Recorder, 2024