Pakistan’s oil-refining business needs an investment of $8 billion to meet rising demand for motor gasoline, jet fuel and diesel and help make the South Asian nation an exporter of fuels.
“Pakistan’s strategic location will facilitate exports to Iran, Iraq, Oman and the Far East,” Zaki Hassan, managing director of Global Union Energy Ventures in Bahrain, said at the third Pakistan Oil and Gas Conference in Islamabad on Monday.
New refineries will help Pakistan meet demand for oil products, which is expected to grow 5% annually and outstrip supply by 9.2 million tonnes by 2010, from 6.9 million tonnes. The country has seven refineries with the capacity to produce 12.8 million tonnes of oil products a year.
“The projected gap is horrifying, and it is high time that Pakistan works on a refining strategy to fill the gap,” Rasheed Jung, managing director of Pak-Arab Refinery Ltd, Pakistan’s biggest refinery, said at the conference. “Investing in refineries rather than increasing exports improves strategic self-reliance and also provides a trade opportunity.”
Pakistan imports about 85% of the oil it uses, half of which arrives as refined products, according to the US Energy Information Administration.
Coastal refineries are essential because they allow surpluses to be exported, Jung said.
Pakistan is expected to have a surplus of motor gasoline by 2012, which could be exported to China, he said.
The capital costs, construction period, and integration with neighbouring petrochemical complexes are among factors that contribute to the success of a new refinery, said Hassan.
“We see Pakistan increasingly becoming a hub for strategic energy investment on the back of an expanding economy and an attractive oil and gas sector,” he said.
The government forecasts Pakistan’s economy will expand 7% in the year ending June 30, from 6.6% a year ago.
International Petroleum Investment Co., owned by the government of Abu Dhabi in the United Arab Emirates, plans to build a $5 billion oil refinery at Hub in the southwestern province of Baluchistan, Jung said. The refinery, which will be Pakistan’s biggest, will have the capacity to process as much as 300,000 barrels of oil a day, he said.
International Petroleum, which will own 75% of the refinery, will start building the processor next year and complete it by 2010. Pak Arab Refinery Co., owned by the Pakistan government, will have a 25 % share.The government of Kuwait also plans to build a $1.2 billion oil processor at Port Qasim near Karachi. The refinery will have the capacity to process as much as 4.5 million metric tons of oil a year, or about 90,000 barrels a day.