KARACHI: Pakistan’s government and the state-owned Pakistan Refinery Limited (PRL) are in talks with Saudi Arabia, China, global commercial banks and financial institutions to secure funding for a $2 billion refinery expansion project, an official said on Tuesday.

The PRL is an energy company located in Pakistan’s commercial hub Karachi. With a processing capacity of 50,000 barrels of crude oil per day, it supplies refined petroleum products countrywide. It is a subsidiary of the state-owned Pakistan State Oil (PSO), which owns 63.56 percent of its shares.

Pakistan is seeking partners that can finance PRL’s Refinery Expansion and Upgrade Project (REUP). The official confirmed that REUP is part of Pakistan’s Brownfield Refinery Policy, which aims to upgrade the nation’s five existing oil refineries to deep conversion refineries, with a combined crude processing capacity of about 350,000 barrels per stream day (bpsd). The total project cost to upgrade these five refineries has been estimated at $5-6 billion. 

“We are in contact with Saudis, Chinese, Export Credit Agencies and Development Finance Institutions and others to obtain the financing and firms have shown interest,” an official with direct knowledge of the development told Arab News on condition of anonymity as he was not authorized to speak to media. 

The official said that the government was in talks with investors in Saudi Arabia while the PRL was in contact with the Chinese government and ECAs, DFIs and global commercial banks. 
 
The PRL aims to double the crude processing capacity of its Karachi hydro-skimming plant to 100,000 bpsd, produce Euro V-compliant motor spirit and diesel, meet evolving environmental standards and decrease Pakistan’s reliance on imported fuels. 

The move would help Pakistan reduce its reliance on costly fuel imports. The South Asian country imported petroleum products worth $16 billion in fiscal year 2025, more than 27 percent of its total imports.

“The project is estimated at $2 billion and is to be implemented in 36 months with debt ranging between 60-70 percent,” the official said.

He added that potential investors may secure an equity stake in the project. 

Pakistan’s Petroleum Minister Ali Pervaiz Malik visited Saudi Arabia earlier this month to lead a high-level delegation at the Future Minerals Summit. There, he reportedly met investors and briefed them on REUP. 

Malik and the petroleum ministry spokesperson Zafar Abbas did not respond to Arab News’ request for comments on the matter. 

The official said Saudi authorities have asked Pakistan to brief them on the project. He said the government has planned an official visit “in the near future” to the Kingdom, where Saudi investors would be given the required briefing. 

The official said once the required financing is available, PRL would aim to achieve REUP’s financial close by December and begin work on the project in January 2027.

“All our potential financers are expected to undertake due diligence of the project in the coming months,” the official said. 

Sheikh Imran ul Haque, project director of the PRL, said the company was making steady and measurable progress on REUP, a strategically significant initiative designed to enhance refining capabilities and product quality.

“PRL has successfully completed detailed technical and commercial evaluations with EPC (engineering, procurement and construction) bidders,” he told Arab News. 

Haque said the company’s next target is signing the EPC contract in the first quarter of 2026.

He said this would be followed by the financial close at the end of the year, marking the formal transition of REUP from its development phase to the execution one. 

Pakistan has desperately tried to reform its economy by looking for cheaper sources of fuel. Its refining sector has long struggled with aging infrastructure, limited upgrading and thin margins. 

Industry officials argue that over-reliance on imports increases exposure to global price volatility, shipping disruptions and foreign exchange pressure.