Pakistan, UAE to Restart Long-Delayed, $6 Billion Khalifa Refinery Project

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The United Arab Emirates (UAE) is ready to begin work on the proposed $6 billion Khalifa refinery project in Pakistan, according to Pakistan's ambassador to the UAE, Jamil Ahmed Khan.

A number of issues have seen the project's progress stalled on different occasions. These include an absence of a secure gas supply; security considerations; and poor governance, which has affected International Petroleum Investment Company's (IPIC) (Abu Dhabi) existing investments in Pakistan's energy sector. The foreign direct investment in the project would be the largest incoming investment in the country's history. The project was first approved by Pakistan's government in 2007.

The ambassador said that a recent joint ministerial commission of Pakistan and UAE in Dubai expressed its willingness to begin work on the mega project.

In a presentation, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that a 500-megawatt (MW) power plant also would be part of the refinery project. Existing plans envisage the refinery on a 1,880-acre site in Khalifa Point at Hub, in Balochistan near the Gaddanis coastal area. The refinery will have a 250,000-barrel-per-day capacity, which is equal to 13 million tons of petroleum products annually. Crude oil feed will be supplied by the Gulf states.

The refinery will be owned by Pak-Arab Refinery (PARCO), which will hold 24%, and IPIC, which will hold 76%.

Khan also reported that the UAE had also extended its support to Pakistan to finalize the free-trade agreement with the Gulf Cooperation Council (GCC) that would prove to be a breakthrough in Pakistan's economic and trade ties with GGC. Member countries of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE, with Jordan and Morocco having received invitations to join.

Describing the trading landscape that Pakistan hopes to join, Khan said that in 2010, the UAE had imported $160 billion of goods and exported $250 billion. Quoting a study he said that by 2020, trade flows between the Gulf region and China could reach $350 billion annually, up from $59 billion in 2005. J P Morgan estimates that the global liquidity increased by $3.9 trillion in GCC from 2002 to 2009, of which around 50% came from Asia and 40% from the oil producers. For related information, see February 2, 2010, article - Pakistan Revives 250,000-Barrel-Per-Day Khalifa Refinery, and December 12, 2011, article - Pakistan Refineries Mull $9.89 Billion Capacity Upgrade Plans.

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