ISLAMABAD: Pakistan is all set to receive a $1.3 billion investment from the United Arab Emirates (UAE) to upgrade Pak-Arab Refinery Company Limited (Parco), said the petroleum minister on Wednesday, adding the country was also open to get petroleum products from Russia on discounted rates but it had not received a bid for it.
The government has been struggling to secure the liquified natural gas (LNG) and other petroleum products from the international market before winter to fulfil the domestic demand. The country rations gas supplies to serve domestic and industrial consumers in winter since it usually witnesses a shortfall in that period.
The prices of petroleum products, including the LNG, have soared sharply after the Russian invasion of Ukraine in February this year that left developing countries like Pakistan in a difficult situation as they struggled to deal with the situation. Pakistan is looking to explore domestic options to boost the supplies through foreign investments in the field.
“We have a go-ahead [from the UAE] in the way of about an investment of $1.3 billion to upgrade the Parco refinery,” Senator Musadik Masood Malik, state minister for petroleum division, told Arab News in an exclusive interview.
The UAE, through Abu Dhabi Petroleum Investments, owns 40 percent shares in Parco. The company is of strategic importance to Pakistan since it operates as an integrated pipeline, refinery and marketing infrastructure while providing efficient, low-cost, environment-friendly energy solutions. It also brings substantial socio-economic benefits to the country and serves as a forex saving resource. Parco’s low business risk emanates from its leading market position, strong demand for its products and advanced plant technology.
“This investment is in the final stages,” Malik continued. “We are trying to take the wrinkles out of the commercial arrangements.”
Asked about the possible purchase of LNG and other petroleum products from Russia, he said Pakistan was willing to receive bids from companies that wanted to supply Russian oil and gas on cheaper rates, but “we haven’t seen anything.”
“PSO [Pakistan State Oil], every fifteen days, it puts out a tender and companies from all over the world bid … no one has ever said Russian companies please don’t bid, so they are open to bid,” he said.
The minister said even if a company offered five percent discount on petroleum product imports to Pakistan, it would win all the contracts, though he said this had not happened.
He maintained Pakistani refineries had independent boards to take decisions, adding no one would have stopped them if they were interested in getting crude from Russia or any other country.
He acknowledged there were “some limitations” in carrying out financial dealings with Russia while noting that companies were independent to structure their own deals.
“If we get a bid which gives us discounted terms and conditions which are favorable to Pakistan, and also do not expose Pakistan to the clause of any sanctions, we’ll be very open looking at it,” Malik said.
“We’ve to make sure that we don’t attract any sanctions because Pakistan wants to stay above board,” he explained.
About the Iran-Pakistan Gas Pipeline, a multibillion-dollar project that both the countries signed in 2009 but which is yet to materialize, he said the international sanctions were holding the government back from doing the project.
“Our legal department continuously looks at all of them,” he said. “We want to make sure that we get cheaper gas, we have good relationship with our neighbors, we don’t want to expose Pakistan to any sanctions.”
The country was also trying to get the LNG from Qatar on deferred payments, but the minister said that either the gas was not available or was “very expensive” in the international market.
“There is no gas,” he said. “If there was LNG available, then there would be second conversation about the payment terms.”
The state minister said a “large gap” between supply and demand of the gas existed in the country as domestic reserves were depleting, adding a “tremendous opportunity” arrived last year to secure long-term LNG contracts from $3 to $7, but “I am afraid we missed the bus.”
“Right now, the market is extremely tight, and the spot cargoes are enormously expensive, so expensive that it is very difficult for anyone, especially a developing country, to afford that price,” he said.
“We are still trying to find additional cargoes,” he said. “We’re hopeful that if we get one more cargo or two cargoes … we’ll be able to provide a lot of relief,” he said. “But we have to be careful because of our external sector. We have to be extremely careful that we don’t end up buying very expensive gas.”
