KARACHI: Saudi Arabia will soon start a feasibility study of the proposed multibillion-dollar oil refinery slated to be set up in Gwadar, a port city in Pakistan's Baluchistan province, Commerce Minister Abdul Razak Dawood told Arab News.
“A Memorandum of Understanding will be signed shortly,” he said.
“The members of (the Saudi) delegation visited Gwadar on Tuesday and they were satisfied with the arrangements they witnessed. The final decision will be made by another delegation at the most senior level,” Dawood said.
The six-member delegation from Saudi Arabia arrived in Pakistan on Sunday to explore investment opportunities in the country.
The delegation was briefed about the China Pakistan Economic Corridor (CPEC) projects linked to Gwadar port and other areas.
"The delegation showed interest in taking part in the bidding process for two power plants in Punjab, setting up a desalination plant, and wind- and solar-power plants in Balochistan,” Dawood explained.
Pakistan has also offered to strike a Free Trade Agreement (FTA) deal with the Kingdom, Dawood confirmed, adding that no firm decision had been taken as negotiations for such a deal would be carried out at a “very senior level.”
Pakistan’s commerce minister said that a delegation of senior Saudi officials will visit Pakistan soon in order to finalize the agreements.
“The refining capacity of crude oil in Pakistan has declined over time. That is why Saudi Arabia has agreed to develop a refinery. They will import crude and refine it here,” Dawood added.
He said the feasibility study would be conducted by Saudi Aramco, and that the company would determine the exact cost of the refinery. “They have the expertise to undertake such studies — expertise that we lack," he clarified.
However, local media reported that Islamabad was expecting the refinery — slated to have a production capacity of 500,000 barrels per day and storage for up to 3 million tonnes — to cost around $9 billion.
Pakistan currently meets 85 percent of its oil requirement through imports. During the fiscal year 2017, the transport sector was responsible for 57 percent of oil consumption, while the power sector consumed 33 percent.
The commerce minister said that the work done by the preliminary delegation and local authorities was considerable, particularly given the short time span of the visit.
The flurry of action between Saudi Arabia and Pakistan comes after the newly elected Prime Minister Imran Khan chose Saudi Arabia for his first official overseas visit.
Following Khan’s visit to the Kingdom, an adviser to Saudi Crown Prince Mohammad bin Salman, Ahmad Agil Al-Khateeb, visited Islamabad on September 27.
Last week, Pakistan’s Information Minister, Fawad Chaudhry, announced that Pakistan and Saudi Arabia have signed “three grant agreements” for major investment in Pakistan, following a formal invitation by Pakistan to Saudi Arabia to become a third partner in CPEC projects.