Pakistan expects $5bn investment to transform refineries soon: petroleum minister

Petroleum Minister Ali Pervez Malik on Sunday said Pakistan expects that companies will start signing $5 billion contracts to modernise the outdated oil refineries next month.

Talking to the media, the minister said the government would now move beyond memorandums of understanding (MoUs) and sign formal investment agreements with companies.

“From next month, you will see $5 billion investment agreements being signed, not MoUs,” he said, adding that the companies would raise capital from around the world and make significant progress towards turning Pakistan’s refineries into some of the best in the world.

He said Pakistan had failed to invest adequately in its refineries over the past 70 years, leaving the country with ageing, low-capacity hydro-skimming refineries and no comprehensive policy to attract the investment required for deep-conversion facilities.

“If you have not invested in your refineries over 70 years, if your refineries are old hydro-skimming refineries, and if you do not have a refinery policy under which the required $5 billion investment can be made to convert them into deep-conversion refineries, how can you expect to utilise them effectively?

“A refinery policy has been approved with my assistance and the cabinet committee on energy headed by Prime Minister Shehbaz Sharif,” Malik said.

Additionally, the minister confirmed that Turkish Petroleum, the oil and gas company of Turkiye responsible for the exploration, drilling, and production of hydrocarbons, will start offshore drilling in Pakistani territorial waters in September/October.

He said that major foreign investment in the energy industry would be made possible by the drilling operations.

“This [offshore drilling] will attract around $120-130 million investment and if the oil is discovered, we could cut down our reliance on imported energy,” he said, adding that many international companies have also approached the government to dig wells to find oil on Pakistani lands.

Petrol prices may ease

Malik also said consumers could receive “good news” on petroleum prices in the next two days if oil prices in the international market remain stable.

The minister said the Oil and Gas Regulatory Authority (OGRA) was responsible for determining petroleum prices, which are calculated on the basis of a seven-day average of international oil prices.

“Oil is expensive in the international market as well as in Pakistan,” Malik said, while recalling the economic challenges faced during the Iran-US war.

He said neighbouring countries had also faced fuel shortages, with motorists in some cases being provided only one or two litres of petrol after showing their identity cards.

The minister said the Finance Ministry had entered into certain agreements while preparing the federal budget.

He stressed the need to develop new mechanisms in the energy sector, saying informed people understood the importance of creating alternative energy arrangements.

Malik said Prime Minister Shehbaz Sharif had honoured the government’s commitments regarding the petroleum levy, adding that the levy had neither been reduced nor increased.

Separately, the minister said there should be a debate on how power and authority could be transferred to the grassroots level.

“Certainly, there should be a discussion on this for improvement,” he said, adding that if any change was required, the Constitution prescribed the procedure for making such amendments.

He stressed that any decision should be taken in the best interest of Pakistan.