Lack of oil refining policy has halted Saudi investment, PAC says

ISLAMABAD: The absence of an oil refining policy has prevented the federal government from making progress on Saudi Arabia’s $8 billion investment, ARY News reported on Wednesday.

It was revealed during the Public Accounts Committee (PAC) session by concerned officials that Pakistan has not made progress on Saudi Arabia’s $8 billion investment plan due to lack of of an oil refining policy.

Saudi Crown Prince Mohammed bin Salman announced the establishment of an oil refinery during his visit to Pakistan in February 2019.

READ: GOVERNMENT ANNOUNCES INTRODUCTION OF NEW REFINING POLICY

The Additional Secretary of the Petroleum Division informed the PAC that Saudi Arabia had announced the establishment of petroleum refineries in Hub and Gwadar. A draft oil refinery policy was prepared last month after more than a year’s efforts, while another two months are needed to finalize it, PAC said.

According to the Chairman of Oil and Gas Regulatory Authority (OGRA), the last oil refinery was established in Pakistan in 2002. Relevant officials informed that Pakistan imports up to 70% of fuel resources, including gasoline and diesel, due to lack of oil refinery capacity.

Petroleum Division officials said only 30% of finished products were purchased from refineries. The Petroleum Division’s additional secretary said the country only receives crude oil on deferred payments from Saudi Arabia, but no gasoline and diesel.

READ: SAUDI ARABIA REFINERY TO CUT $1.2B OIL IMPORT BILL: OIL MINISTER

It has also been learned that India can continue to buy cheap oil at 100% reduced rates due to old agreements, while no agreement has been signed between Pakistan and Russia for oil purchases .

During Saudi Crown Prince Mohammed bin Salman’s visit to Pakistan in 2019, Saudi investors showed strong interest in investing in Pakistan’s oil sector besides pledging investments worth billions of dollars in different sectors.

Pakistan and Saudi Arabia had also agreed to set up a Joint Working Group (JWG) for the establishment of an $11 billion oil refinery and petrochemical complex at Gwadar Port.

Establishing the refinery and petrochemical complex in Pakistan would help reduce the annual oil import bill by $1.2 billion.

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