Khalifa Coastal Oil Refinery project: Parco likely to support resumption of work

The board of directors of Pak Arab Refinery (Parco) is expected to support resumption of work on Khalifa Coastal Oil Refinery project with a capacity of refining 250,000 barrels oil per day (bpd). It is learnt here on Friday that Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain would be attending a meeting, scheduled to be held on March 17 in Abu Dhabi.
Sources revealed to Business Recorder that the management of UAE state-run International Petroleum Investment Company (IPIC) had suspended the work on the Khalifa Oil Refinery project after the controversy with the Pakistan government over the extension of Parco Managing Director Rasheed Jung.
They said the Pakistan government fulfilled the demand of the IPIC management by giving extension to Rasheed Jung for one year and the IPIC was now expected to resume work on KCR. The IPIC management had sought two-year extension of Rasheed Jung.
An accord on implementation of the Khalifa Coastal Refinery project was signed at the Prime Ministers House here on November 13, 2007. The UAE is also the partner in Parco oil refinery. The UAE has 30 percent equity in the Parco, located in Mehmood Kot area of Multan.
The Parco oil refinery is the countrys biggest project with a capacity of processing 100,000 barrels of oil a day. The total refining capacity in Pakistan is over 200,000 barrels per day and the Parco is the major contributor to the crude oil refining requirement.
The Petroleum Advisor visited the UAE on the issue of Khalifa Oil Refinery project in January and the IPIC management had agreed in principle to resume work on 5-6 billion-dollar Khalifa Oil Refinery project in Balochistan province. According to a tentative schedule, the board of directors of Parco will meet in IPIC office in Abu Dhabi on March 17 and will also consider the Khalifa Oil Refinery project.
The Petroleum Advisor was told during his visit that the issue of KCR would be discussed in the board of directors meeting. The Pakistan government is seeking assurance from the IPIC management in writing to resume work on Khalifa Refinery project, the sources said.
The IPIC, in its letter to the Petroleum Ministry written on December 15, 2008, said that global crisis had exposed the Parco to substantial liquidity problems and the company was facing financial difficulties even with routine matters such as opening of letters of credits (LCs).
The company was of the view that it was not the right time for the management to make changes in the Parco. The IPIC had supported Jung fully and termed his removal not acceptable to it. The IPIC had warned it would immediately cease its involvement in the Khalifa Coastal Refinery project if the Pakistan government did not give extension to Jung.
The IPIC believed that the Parco was in process of implementing the 132 million-dollar diesel hydrodesulfurisation project (DHDS) and 5-6 billion-dollar KCR that might be delayed with the removal of Jung. In return, the Petroleum Ministry had responded in a letter written on December 23, 2008, arguing that Jung was superannuated on February 15, 2006 and there was no recommendation from the board of directors for continuation of Jung as Managing Director beyond December 8, 2008.
The Petroleum Ministry had also offered to create a suitable position in the KCR for Jung if approved by the board of directors. But the IPIC insisted on giving extension to him in the Parco. After giving extension to Jung in Parco, the Petroleum Ministry is now hopeful that the IPIC would resume work on the KCR that was suspended due to issue of extension of the Parco Managing Director.