The engineering, procurement, and construction (EPC)-F mode proposal from Pakistan for Saudi Arabia’s $10.5 billion deep conversion refinery at Hub, Balochistan, is currently being evaluated by Saudi Aramco.
Both counties must first sign an agreement, which is followed by a number of contracts, including ones for money, the host government, and security, before they can enter into a formal agreement.
Aramco Stance on Green Refinery Proposal
Aramco has completed a pre-feasibility research and will now carry out a feasibility study before starting the project, according to a national newspaper. China would also assist in reducing the risk associated with Saudi investment.
The Green Refinery Policy has already been enacted by Pakistan and announced to major economies. A 20-year tax discount and a 7.5 percent deemed tariff are provided by the refining strategy.
Hub, Balochistan will host the project, which will have a daily capacity of 350,000–450,000 barrels.
The refinery’s price could increase to $14 billion if a petrochemical complex is added to the plan. “No new hydro-skimming refinery shall be allowed to be installed in the country and only brand new deep conversion refinery will be allowed,” according to an energy ministry official.
The $10.5 billion refinery will be built with a loan-to-equity ratio of 70:30, with Saudi Aramco and Pakistan State Oil (PSO) splitting the equity stake equally on a 50-50 basis..
Each of Saudi Aramco and PSO would put up $1.5 billion in equity, with EPC loans covering the balance. It’s feasible that Saudi Arabia contributes the entire $3 billion (30%) equity.
In either case, the Petroleum Division’s minimum Euro 5 criteria would apply to any marketing company in the nation that purchased items from the new green refinery.
The refinery would be allowed to export excess petroleum products with OGRA approval, whereas refineries may export goods with specifications without local demand.
To read our blog on “KSA will build a $12 billion unit of the Aramco oil refinery in Gwadar,” click here.