$6 bn Parco Coastal Refinery to come on stream in 2025-26

ISLAMABAD: The state-of-the-art and deep conversion Parco Coastal Refinery (PCR) valuing $5-6 billion with capacity to refine 250,000 million barrels per day (BPD) crude oil at Hub, Balochistan, will come on stream in 2025-26.

The Government of Pakistan will have 60 percent shares and Abu Dhabi’s International Petroleum Investment Company (IPIC) 30 percent and OMV 10 percent, a top official at Petroleum Division told The News. He said that the financial closure of the mega project will take one and a half years to complete and then it will be completed based on EPC (engineering, procurement and construction) model.

The refinery will be built, he said, with capacity to produce oil products with Euro-4 and 5 spec. However there will be provisions to further upgrade the products at Euro-6 specs. The new refineries will be having 20 years tax holiday.

Spokesman for Petroleum Division, Additional Secretary Sher Afgan, said that refineries are a strategic asset for energy security of any country as they ensure uninterrupted fuel supply. Refinery is a highly complex and capital intensive industry with marginal returns on investment.

In Pakistan, the investment in refining industry had not been encouraging as no green-field refinery project has been undertaken in the last 50 years, except for Parco Mid-Country Refinery (MCR), which was established in 2000.

Considering the capital intensive nature of refineries and significance to the country, the Government of Pakistan has recently announced various incentives for green-field refinery projects to encourage investment in this sector.

Parco has initiated the Parco Coastal Refinery Limited (PCRL) project, which is progressing as per plan and is expected to complete in 2025-26. The project is a 250,000 bpd deep conversion, modern refinery with marine facilities, at an estimated project cost of $5-6 billion. PCRL will be the largest industrial project in the Pakistan’s history to be located in coastal area of Balochistan near Karachi.

The PCRL will be a significant addition to Pakistan’s oil refining infrastructure, focused on Euro IV/V products for domestic market. The project will reduce the growing supply-demand gap for fuels by 11 million tons.

Thus, reducing pressure on foreign exchange. The project provides strategic storage to the country and also has various socio-economic benefits tothe country including (i) increased direct/indirect employment opportunities, (ii) development of local community, (iii) development of SMEs and allied industry (iv) reliability/self-sufficiency in fuel supply, (v) an additional modern infrastructure (vi) economic growth and (vii) reduced congestion.

The Economic Coordination Committee (ECC) accorded, the official said, approval to the project with the name of Khalifa Coastal Refinery way back in 2007 but after 2007, the government changed. In the ECC held in 2007, the then government gave the earmarked Khalifa point in HUB, Balochistan for the refinery. However, in 2013, the Implementation Agreement (IA) was signed in 2013, but the project couldn’t take off and then in 2016, this mega project with the name of Parco Coastal Refinery (PCR) got revived.

Pakistan will use its retained income in Parco as equity in erection and commissioning of Pakistan Coastal Refinery. To a question, the top official said that in 2007 a technical commercial feasibility was carried out which is now being updated.

The Jacob Consultant, he said, carried out the technical commercial feasibility in 2007 and the same company has been tasked to upgrade the same feasibility keeping in view new dynamics of the Pakistan’s market. Pakistan’s existing refineries have the capacity to refine the 13.5 million ton of crude oil whereas the country’s demand stands at 25 million ton. According to the estimates, the country’s requirement will balloon up to 50 million ton by 2030.

To a question, he said that the existing refineries are in process to upgrade themselves and if they don’t upgrade themselves, they will automatically be indifferent. However, they have been offered the same facilities and 20 years tax holiday provided they upgrade themselves. In case they do not upgrade themselves, there will be huge deficit of refined oil products in the country.

Meanwhile, the US-based company Technip has been assigned for licence process and will usher in process to construct the refinery in Hub as the land of 1800 acres, which was allocated in 2016 has been walled.