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Saturday, April 13, 2024

Pakistan offers partnership to China in PARCO

In a bid to attract investment for the $9 bn coastal refinery PARCO, Pakistan has decided to offer partnership to China.

The government of Pakistan has decided to seek investment from China for becoming a shareholder in Pakistan Arab Refinery Company (PARCO) which is a state-of-the-art coastal refinery and petrochemical complex worth $9 bn. This futuristic coastal refinery will be built in Hub, Balochistan.

Pakistan has also asked China to invest in several other projects, including modernization of existing refineries, establishing underground gas storages, extraction and production activities and national seismic surveys in frontiers and hard areas, like some districts of Balochistan and bordering areas of Pakistan and Afghanistan.

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Amongst others, PARCO Refinery is expected to be the most prominent Pakistani project to be included in the agenda of the next 10th Pak-China JCC meeting. LNG storages and exploration and production projects would also be offered to China on behalf of Pakistan.

A letter was also written to Ambassador of Kingdom of Saudi Arabia in Pakistan Nawaf Saeed Al-Maliky by Special Assistant to Prime Minister Nadeem Babar in September 2020 in which he had asked Saudi Arab to become a partner in Parco. The Saudi Envoy had responded favorably to the letter in a meeting with SAPM on Petroleum and assured that his country would seriously consider the offer.

In another positive development, PARCO AND PERAC signed a 30-year lease agreement for the project after the Government of Balochistan granted NOC for development of 1,811 acres of land on 27 September 2020. Petroleum Division is also doing its best to make the POL tariff regime attractive to capture maximum investment in the refining sector. Presently, higher tariffs have been imposed on crude oil and finished products don’t have a competitive tariff structure either which makes the investors reluctant. The feasibility for this refinery has been done by Jacobs Consultancy while the configuration study has been conducted by Honeywell (UOP, USA).

Pakistan Arab Refinery Company (PARCO) which was approved in October 2007 but could not be developed due to lack of funds, is said to have the capacity to refine 250,000 barrels oil per day, equal to 13 million tons of petroleum products per annum. It is expected that Prime Minister Imran Khan would inaugurate it in April-May, 2021 after which the development work on the oil terminal would kick off.

PARCO Coastal Refinery Limited (PCRL) has also become a part of PARCO as a 100pc subsidiary and the present government is offering various incentives for development of green field refinery projects which includes exemption from all taxes for 20 years from the date of commercial production. The execution strategy and the governance structure has also received the government’s approval and the project site studies have also been concluded.

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Technip FMC has been appointed as the Project Management Consultant while Allen & Overy has been appointed as International Legal Adviser. The revised market study has also been updated along with the finalization of the project cost. The International Financial Advisers, the Front-End Engineering Design (FEED) contractors, the Environmental Impact Assessment (EIA) contractors have also been shortlisted and they would soon receive and invitation to bid.

PM Khan has dubbed the addition of PARCO’s refinery as a “good omen” for Pakistan’s petroleum sector as he believes it would help the country enhance its petroleum production capacity.