Saudi Arabia links oil refinery’s setup with political consensus

ISLAMABAD: Saudi Arabia has reportedly linked establishment of billions of dollars oil refinery in Pakistan with political consensus, cabinet approval and stringent conditions proposed by M/s Aramco, well informed sources in Petroleum Division told Business Recorder.

In a follow up to the visit of Minister of State (MoS) for Petroleum, Musadik Malik to Saudi Arabia, Pakistan Embassy is working closely with the relevant Saudi authorities to build on the understandings reached during the visit.

In this regard, Pakistan ambassador has suggested the following roadmap: on the oil refinery project, as undertaken by the MoS, GoP should pursue a favourable decision of the Cabinet in support of the terms and conditions proposed by Aramco. Once decision is made, Pakistan should convey it to the Saudi authorities in writing.

The Saudi Minister of Investment had suggested that in order to develop across the board political consensus and ownership of the oil refinery project the matter may also be tabled before the Parliament.

Pakistan ambassador argued that the idea of Parliament approval merits careful consideration.

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According to the ambassador, the Embassy is already in touch with the focal person nominated by the Minister for Energy during the private dinner hosted by him.

The ambassador has suggested to Islamabad that the embassy should be kept up-to-date on the developments on oil refinery project. The ambassador, sources said, has noted that it was decided during the meeting with Deputy Minister for Investments Badar al-Badar that Islamabad would share project briefs and teasers with the Saudi side for consideration.

Minister of State for Petroleum and Natural Resources, during his visit to Saudi Arabia informed the Aramco Executives as well as the Saudi Ministers of Investment, Energy and Minerals & Investments that Prime Minister Shehbaz Sharif has given ‘in-principle’ approval for agreeing to all terms and conditions set by Aramco to make the project economically viable. He stressed that the oil refinery project was strategically important for Pakistan and the Government was keen to move ahead on it.

The decision to accept Aramco’s conditions would be presented before the Cabinet and a favourable outcome is expected within a couple of weeks. He suggested that both sides should agree to a high-level committee to finalize the details of the project and address outstanding issues, if any.

Malik further stated that Pakistan had recently introduced a new law that allowed the government to sign contracts on G-2-G basis without going into cumbersome and complicated bidding processes.

In the mining sector, it was agreed that a working group should be constituted to devise a roadmap. The Vice Minister for Mining Affairs from KSA would lead this working group from the Saudi side.

The Saudi Ministers welcomed the decision taken by Pakistan and said they looked forward to receiving formal approval of the Cabinet. They underscored that Kingdom’s Leadership was also keen on implementing this project which would be another example of strong partnership between the two countries. They also highlighted that since Aramco was a publicly listed company, the economics of the project was also important.

Saudi Minister of Finance also brought up the issue of Al-Jomaih Group’s investment in K-Electric and said that issue faced by one investor could potentially discourage other investors from the private sector in Saudi Arabia. He said the Kingdom wanted to bring more investors to Pakistan but as long as there were isolated negative examples it would be difficult to build trust.

The Minister of State responded that he would personally take up the matter with concerned authorities and push for its early resolution. The ambassador further contended that projects planned by ACWA Power feature high on the priority list of the Saudi leadership. The Saudi Minister of Investment had clearly stated that ACWA Power is more important in the Kingdom today than Aramco. The ambassador suggested that Islamabad should accord priority to ACWA Power - especially for future G-2-G projects.

Copyright Business Recorder, 2023