ISLAMABAD: M/s Sinopec, China’s Petroleum Refineries Company, and Saudi giant, M/s Aramco, are reportedly not satisfied with the data provided by the Pakistan State Oil (PSO) for huge investment of about $10 billion in a refinery as a trilateral joint venture under the umbrella of China- Pakistan Economic Corridor (CPEC), well-informed sources told Business Recorder.
The issue of establishment of a refinery is under discussion with Riyadh since long at the highest level, but it has not materialised due to very slow movement.
According to the plan, M/s Aramco has to develop non-binding trilateral (Pakistan, Saudi Arabia and China) MoU on preparation of feasibility study for crude to chemical refinery plant.
Sinopec not interested in refinery project
PSO, had also approached Chinese giant, M/s Sinopec, to join the project but later intimated that it is not interested in crude refinery but can consider petrochemical plant, subject to its feasibility.
However, now Pakistan’s ambassador to China has appraised that Sinopec is not satisfied with the data provided by PSO, whereas, Aramco has also raised its apprehensions on the market study carried out by PSO.
“Both parties now want that Pakistan side should carry out new/ updated market study to further proceed in the matter,” the sources added.
The managing director PSO had informed to a high-level meeting that a Board meeting is being convened for seeking approval to conduct fresh market study in line with the desires of Sinopec and Aramco. It is; however, unclear if the Board has given its consent on new market study or not.
Petroleum Minister Dr Musadik Masood Malik, who presided over the meeting to review update on the follow up of the prime minister’s visit to KSA in April 2024, was of the view that it seems M/s Sinopec is not interested in the project. He directed that fresh/ updated market study may be carried out at the earliest.
PSO, which is interacting with Bank of China and Sinopec, had also written a letter to President Sinopec Corp Yu Baocai, Managing Director/ Chief Executive Officer PSO Syed Muhammad Taha conveyed PSO’s interest in inviting Sinopec, a global leader in the energy sector, to participate in a major Greenfield refinery and petrochemical project in Pakistan.
Minister for Planning, Development and Special Initiatives held a meeting with the company’s Vice President LV Lianggong to discuss prospects of establishing a refinery in collaboration with M/s Aramco and PSO, who argued that the give the ongoing debate on climate change, the refinery business was contracting. He added that Sinopec would; therefore, accord a careful consideration to that proposal.
Sinopec is of the view that it has to evaluate the whole eco-system, which requires a network of pipelines, jetties, an analysis of the cost of inputs; and rate of investment. As Pakistan lacks such infrastructure, the cost of production would be too high, resulting in diminished rate of returns. Sinopec; however, would be willing to discuss trading of petrochemical products and that too on the basis of supply and demand.
Copyright Business Recorder, 2024