In an astonishing development, Chinese firm East Sea Group Limited (ESGL) has begun work on a $4.5 billion oil refinery in Gwadar, with an annual oil processing capacity of 8 million tonnes.
The project will be built in two stages, according to an official document. The first phase will have a refining capacity of 5 million tonnes per year.
East Sea Group will place at least six crude oil transshipment vessels totaling 2 million tonnes at Pakistan’s Gwadar port each month, beginning with and supporting its own oil source business, and will also provide oil transshipment and transshipment services to major Middle Eastern oil-producing countries.
During a briefing at the PCICCI secretariat last week, East Sea Group CEO Fang Yulong, who is also Senior Vice President of the Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI), created a pleasant ripple by announcing the launch of the mega project of building the “Gwadar Petroleum Storage and Transportation Trading Centre.”
In June 2022, China Overseas Ports Holding Company (COPHC) Chairman Zhang Baozhong and Pakistan Prime Minister Shahbaz Sharif discussed the possibility of constructing an oil refinery.
Taking the matter seriously, a committee was formed on PM Shahbaz’s orders to facilitate the establishment of the refinery.
All stakeholders expressed their full support and readiness to facilitate the refinery at the committee’s first meeting on June 27, followed by a number of meetings under the chairmanship of the Secretary Petroleum Division.
According to sources in the Ministry of Energy (Petroleum Division), the proposal revealed that the refinery will provide Pakistan with significant storage capacity, allowing it to keep reserves for a longer period of time and save foreign exchange.
When completed, the multibillion-dollar project will spur additional investment in Gwadar’s petrochemical industry.
Furthermore, the proposal requested the assistance of relevant government departments in order to facilitate the formation and subsequent implementation of a broad-based policy framework in order to materialize the project.
Concerned institutions are preparing to scrutinise the detailed business plan and feasibility study in order for the government of Pakistan to approve the megaproject. Oil and Gas Regulatory Authority (OGRA) will fulfil the licencing requirements under OGRA Ordinance 2022 for planning and construction.
Nagman Abdul, President of the Gwadar Chamber of Commerce and Industry, described the oil refinery project as a “catalyst to open up a new chapter of development.”
He added that the creation of job opportunities will not only open up more business opportunities, but will also reduce Pakistan’s oil bill.
The decision to build a Chinese oil refinery appears to have encouraged other foreign investments in the oil refinery sector that had previously stalled for a variety of reasons.
The decision to build a Chinese oil refinery appears to have encouraged other foreign investments in the oil refinery sector that had previously stalled for a variety of reasons.
Saudi Arabia’s Energy Minister Khalid Al-Falih announced in January 2019 that the Arab country intended to build a $10 billion oil refinery in Pakistan’s deep-water port of Gwadar.
However, the plan was abandoned. Later, it was hinted, albeit vaguely, that the oil refinery might be established somewhere else in Pakistan rather than Gwadar.
Saudi Arabia has recently sprung back into action, signalling renewed engagement in Gwadar.
On October 27, Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar held a virtual meeting with HRH Prince Abdul-Aziz bin Salman bin Abdul-Aziz, Minister of Energy Kingdom of Saudi Arabia, on the First Joint Economic Sub Committee of the Saudi – Pakistan Supreme Coordination Council.
To read our blog on “The brand-new Gwadar Airport will open in March 2023,” click here
