Saudi Aramco may invest in refinery project in Pakistan's Gwadar

In the Gwadar refinery agreement, state-owned Pakistan State Oil will partner with Aramco, the Saudi state oil giant, petroleum minister Ghulam Sarwar Khan said.

While details of the refinery’s costs and capacity are to be finalised after a memorandum of understanding approved by Pakistan’s cabinet on Thursday is finalised, the proposal gives a new life to China’s economic corridor through Pakistan.

However, the visit of a Saudi delegation to Pakistan did not help to provide a solution for the debt-laden country’s looming foreign currency crisis.

Pakistan may still have to approach the International Monetary Fund (IMF) for its second bailout in five years. 

Petroleum Minister Khan said talks had not sought deferred oil payments, contradicting an earlier statement by the finance minister.

Gwadar, in the southwestern province of Baluchistan, is the crown jewel of China’s $60 billion investment in Belt and Road Initiative (BRI) projects in Pakistan.

Last month, Pakistan invited Saudi Arabia to invest in projects related to BRI’s China Pakistan Economic Corridor (CPEC).

The visiting Saudi delegation, led by energy adviser Ahmad Hamed Al-Ghamdi, visited Gwadar on Tuesday. “They showed an interest to immediately invest in the refinery,” said Khan, the petroleum minister.

“We sat down and held initial discussions with them and it was principally decided by both sides that it will be a government-to-government agreement.”

Any refinery deal needs support from the Baluchistan provincial government, and there has been concern that neighbouring Iran might object to a project involving arch-rival Saudi Arabia.

However, on Thursday, Iranian Ambassador Mehdi Honer Doost raised no objections. “Iran will welcome Saudi and other Muslim countries investment in Baluchistan,” Doost told reporters.

Pakistan wants a new refinery to reduce its $16 billion bill for foreign petroleum by importing more cheaper crude oil to refine it self.