Thank you for that detailed explanation friend. It really helped clear things up.

Unfortunately, what the problem is, as always, the bad governance in our country. As you clarified, two projects in the last ten years not two refineries. That means instead of fast tracking such endeavors for the sake for the nation, they were as usual bogged down in the usual corrupt politics. No government recently has worked for the nation; only for is own political optics. Pakistan has been left so far behind in so many fields because of it.

Also, from what I understand, it would’ve been so much better if our dear leaders had the foresight to do these things in house. In its current form, this will become highly political (now or at some point) and not as beneficial to the country as we would like. There will always be an outside party benefitting from our resources more than us. A situation that could have been totally avoided if the previous/or any attempts at refineries in Pakistan were actually handled for the benefit of the nation.

Even basic infrastructure and resource utilization in our own country is at the mercy of other nations’ whims and not the right of our nation.

A deep-conversion refinery will definitely produce Euro 6+ level of fuels. Currently all the refineries in Pak are hydro-skimming refineries. When they say the actual capacity usage is less, it means that the plant is so old it has to be run carefully, not at maximum output. Another factor is that there is no consumption of furnace oil in Pakistan. After the diesel & petrol have been separated from crude, only half of the crude has been utilized and the remaining half is furnace oil (more than half in case of the recent romance – Russian crude). All of this crude is then exported (to UAE?) to be refined into diesel & petrol, some of which gets exported to Pakistan and some in other places.

Let’s see how it rolls out! There is too much to be understood here.

First of all, when they say 2 refinery projects, it just means 2 projects within the existing 5 refineries – Byco, PARCO, Attock, NRL & PRL. There have been no new refineries. PARCO has been tooting their horn about the PARCO Coastal Refinery @ Hub since a very long time but apparently haven’t even begun construction for it anywhere, yet they actually are content with their PARCO Mid-Country Refinery. As per the search on Google Maps, the Coastal Refinery only exists as an office suite in Emerald Tower at 2-talwar, Clifton.

The next obvious thing is that 10 bn US$ is tuppence for Aramco. Then why are cash-strapped Pakistani government companies going to “provide equity”? The last sentence is contrary to this info: “Saudi oil firm showed a willingness to inject the entire equity”, guessing behind the scenes, the Saudi firm wanted to invest it fully and also avail the benefits of SEZ, tax-free etc. so most probably the reason why Pakistani government has mixed important organs of the state in the venture to keep an eye on what’s going on.

The geopolitical significance of the project is must to observe. Saudia has long been an ally of the US. But Gwadar port is under full Chinese influence under the CPEC program! Recently Saudia has been becoming distant from the US and closer to Russia and China. But China has been becoming closer to Iran too. In 2021, China & Iran entered into a 25-year 400 bn US$ One Belt, One Road deal. The CPEC agreement with Pakistan in 2015 was also part of the One Belt, One Road but only 46 bn US$! Gwadar is only 60 km from Jiwani border. Iran sure has interests in that region of Pakistan. Once Pakistan is making enough fuel, to recover the money spent in making the refinery, will smuggled diesel be controlled? Will Iran digest this news easily? Will China digest this news easily? Will USA digest this news easily? Will India digest this news easily? Will UAE digest this news easily? Will Russia digest this news easily? Will Singapore digest this news easily? Is it possible that UAE will lose one of its source of furnace oil? After all furnace oil is a finished product, it is easier to just buy & sell. And easier to convert into diesel and petrol compared to converting from crude.
Security in Balochistan has always been a concern. An oil refinery complex is far more sensitive than a harbor. Gwadar isn’t the main harbor of Pakistan, the main harbor is Karachi, but the largest installed capacity and latest tech refinery will be a main source of energy and much more lucrative target for enemies than the harbor. The machinery in the refinery is also much more sophisticated than the machinery in harbor. Government can be expected to assign Pak Forces with full force to protect this asset.
Or is this just Pakistan’s method to balance the increasing Chinese power .. which by the way is becoming more friendly with Iran by the day .. in that area through its most trusty friend: Saudia?
What impact will a new, efficient, high-productivity tax-free refinery have on the existing refineries’ business? Will they bankrupt? They are already running at less than capacity. How will they take this news? Will they begin lobbying?

Jog your memory at the time of Saudi Crown Price MBS’s visit to Pakistan it was the news that Aramco is building a 44 bn US$ refinery in India, at that time Pakistanis were in dismay because they were expecting this refinery to be in Pakistan. The news of the refinery in India was at least 10 months old but it had hit the Pakistani social media at that time, at the actual time of that refinery’s news Pakistanis were busy in politics. The refinery in India also has the similar ownership structure .. 50% Aramco, the remaining 50% owned by a consortium of 3 SOEs.

And most important of all .. will the 2-lane Makran Coastal highway with abysmal mobile coverage be enough to carry out all the communications between Karachi and Gwadar? Are they going to widen the highway and provide power and wireless connectivity along the way by way of USF and national roaming service?

What level of refinement are we talking here? Just making 300K barrels of crude per day or will this also refine fuel up to the euro 5 level that is required locally?

What will Pakistan get out of this? who will own this? as the investment is equity driven, doesn’t that mean whoever has the most money/shares in the thing calls the shots. We all know that will not be Pakistan. We barely have two billion to rub together (total) let alone the better parts of 10 billion dollars this would require. so who is effectively in charge here?

Is this a case where they will extract local oil in Pakistan and export that while giving Pakistan a small cut. Basically using our resources to make their billions and giving Pakistan a few millions to keep us quite. I believe something like that has happened with some salt mines that were “foreign investment-ed” to the US recently. 🤣. Is this more of the same?

This Saudi investment is being given some massive tax breaks and incentives to start this business venture of theirs. why couldn’t these incentives and tax breaks be offered to local companies to drive pure local investment in opening Pakistan’s own home grown refineries that would sell to these other nations thereby making all profits earned Pakistan only. Why is it that other countries can do all this but Pakistan always needs some “foreign investment”?
Only two refineries in the past ten years in Pakistan. What was the reason for that. were they given the same incentives as this deal and they still failed? or was it over burdened with corruption? what was the reason for its failure? Why cant we make anything like this without failing or requiring foreign investment to ensure we are doing an honest job?