Punjab investment board signs MoU for $5bn oil refinery

[ghazi52]

Punjab investment board signs MoU for $5bn oil refinery


LAHORE: The Punjab Board of Investment and Trade (PBIT) on Friday signed a memorandum of understanding with Grace Refinery, an international petrochemicals company, for establishing an oil refinery with $5 billion investment near Kot Addu.

PBIT CEO Amena Cheema and Grace Refinery CEO Uzma Bashir signed the MoU on behalf of their respective organisations at the PBIT head-office.

Ms Bashir, speaking to reporters, said her company was going to introduce the latest Euro 6 standard oil refinery technology in Pakistan that would reduce carbon emissions from fuels.

She said the refinery, with 220,000 barrels per stream day (bpsd) capacity, would substantially substitute oil imports in the country and generate around 50,000 to 70,000 direct and indirect employment opportunities in South Punjab.

She added the project would take three to five years to complete but the company was trying to channelise the investment during the present government’s regime.

Responding to a question, she said Pakistan’s refining production was around 800,000 barrels a day, but the existing refineries were catering only up to 350,000 barrels a day while rest of the refined oil was imported to Pakistan. She added her refinery would help meet the shortage.

Ms Cheema said the MoU was a part of an ambitious venture that would have a positive impact on both the economy and local population.

Under the MoU, PBIT would act as one window facilitator for the Grace Refinery for fast-track facilitation and necessary support for early commissioning of the project, adding the board would also help the foreign company in acquisition of necessary licenses and land for their market entry.

The delegation of Grace Refinery was led by its Chairman S.M. Ghaus and Project Director Shahzad Akhtar and others.

 

[Muhammad Omar]

That's huge

 

[X-2.]

Good step

 

[Imtiaz_Sarwar]

It looks like Grace Refinery is owned by Pakistani origin people as the names of the officials of this company are Pakistani.

 

[ziaulislam]

i dont want a sudden boom that results in surplus, there are three main oilrefineries in addition to this one, we will probably end up in surplus in very tight competition but we have acess to huge markets in afghanistan as well if we work it out

 

[Kabira]

i dont want a sudden boom that results in surplus, there are three main oilrefineries in addition to this one, we will probably end up in surplus in very tight competition but we have acess to huge markets in afghanistan as well if we work it out

These will likely take many years to build so demand will be increased as well by then.

 

[somebozo]

Another no-background sham project awarded to PMLN phuppo..Grace refinery seems to be some kind of offshore incorporated entity on paper only..mostly likely from UAE..no information exist about them in internet search except their under construction website

http://grl.com.pk/

Then there is genuine business by the name of Grace refinery but it is from India

http://www.gracerefinery.com/

 

[niaz]

This news item appears to me as nothing more than a publicity stunt.

Who are these people? Did anyone hear of them before this?? I have not come across any of the names in the oil industry, either in Pakistan or internationally. Obviously these must be wealthy entrepreneurs who think that they would make a lot of money in oil business, thus they dreamed up the idea of setting an oil refinery. But where is the funding coming from, surely no one in Pakistan has $5-billion? Even with the leverage, a $5-billion investment would require at least $1-billion of investor’s own money, but if the owners are Billionaires; where have they been until now?

250,000 bbl. per day Shell /Aramco (SASREF) refinery in Jubail employs less than 1000 staff. 1.2-million barrels per day Reliance Refinery at Sikka, Gujarat, employs total of 23,166 staff and it is about 6-times the size. Even with 25,000 staff working in the Reliance retail petroleum business (about 1500 petrol stations, service depots & supply chain), RIL employ barley 50K people. However a CEO of the new refinery declares they would create up to 70,000 direct job opportunities!

The claim is obviously a gross exaggeration and not to be believed. At the very best such a refinery could provide employment to a couple of thousand Pakistanis.

It is said that “Refinery with 220,000bspd capacity is being designed on Euro 6 standards”. Euro 6 standard applies to the emission test of the vehicles, not on a ‘refinery’. Product specifications are normally listed as EN then a number. For example EN590.for diesel and EN 228 for gasoline. Anyone connected with the oil industry will know that the CEO should have either said that the refinery products will meet the latest European standards or that the refinery will produce Ultra Low Sulphur diesel with max 10 ppm sulphur.

It is also mentioned that

“She also disclosed that the Grace Refinery management has requested their crude oil supplier to join hands in building an oil pipeline from the source into Pakistan for its feedstock”.

http://dailytimes.com.pk/business/30-Jul-16/pbit-to-assist-grace-refinery-invest-rs-5bn-in-punjab


Who can be the supplier through pipeline? Iran??

Iran declined to build IPI gas pipeline beyond Iran’s border. Why would they now agree to build the pipeline all the way to Kot Addu? Or did the CEO mean up to Pakistan border only. If so who is going to finance the pipeline up to Kot Addu? Refinery would not run without the crude feed.

Pipeline from the Arab Gulf Countries is put of the question as it has to cross the sea.
Transportation to Karachi by the ships and onward to Kot Addu by pipeline is of course feasible, but a 30-inch 500 mile long crude pipeline would cost additional $1-billion. Would the crude supplier finance it?

GOP would not like to pay more for the refinery produce than the imported price; hence Pakistan would insist that refinery sells the refined products at the import parity price. It is highly unlikely that an upcountry refinery running on imported crude would be able to compete with the state of the art export refineries located in the AG.

Grace refinery has better chance of being competitive if located at or near Karachi and import crude oil in the VLCCs (250 thousand tonne cargo lots) discharged through the floating SPM; similar to the arrangement for ESSAR & RIL refineries in Gujarat.

However we have seen the fate of shore located refineries projects as well. Bosicor refinery never really worked and is now virtually dormant. Byco has been under construction for almost 10 years and still not complete. Indus Refinery project is dead as a dodo.

Finally, if the owners are really Indian, it is stranger still. RIL ( Reliance Industries Ltd) exports refined products equal to all the Arab Gulf refinery exports put together. RIL could meet all of Pakistan's demand except that of furnace oil without any problem, All that is required is a white oil products pipeline.

Besides would Mody Gov't allow $5-billion investment in Pakistan and how would people like Imran Khan exploit this 'Bending over or Chamchagiri" by Punjab gov't to the Indian investors?

I hate to be a spoil sport, but in my opinion this project is nothing more than a flash in the pan. MOU does not mean much; I would only believe when it is ready and operating.

 

[Bouncer]

This news item appears to me as nothing more than a publicity stunt.

Who are these people? Did anyone hear of them before this?? I have not come across any of the names in the oil industry, either in Pakistan or internationally. Obviously these must be wealthy entrepreneurs who think that they would make a lot of money in oil business, thus they dreamed up the idea of setting an oil refinery. But where is the funding coming from, as no one in Pakistan has $5-billion? Even with the leverage, a $5-billion investment would require at $1-billion of investor’s own money, but if the owners are Billionaires; where have they been until now?

250,000 bbl. per day Shell /Aramco (SASREF) refinery in Jubail employs less than 1000 staff. 1.2-miilion barrels per day Reliance Refinery at Sikka, Gujarat, employs total of 23,166 staff and it is about 6-times the size. Even with 25,000 staff working in the Reliance retail petroleum business (about 1500 petrol stations, service depots & supply chain), RIL employ barley 50K people. However a CEO of the new refinery declares they would create up to 70,000 direct job opportunities!

The claim is obviously a gross exaggeration and not to be believed. At the very best such a refinery could provide employment o a couple of thousand Pakistanis.

It is said that “Refinery with 220,000bspd capacity is being designed on Euro 6 standards”. Euro 6 standard applies to the emission test of the vehicles, not on a ‘refinery’. Product specifications are normally listed as EN then a number. For example EN590.for diesel and EN 228 for gasoline. Anyone connected with the oil industry will know that the CEO should have either said that the refinery products will meet the latest European standards or that the refinery will produce Ultra Low Sulphur diesel with max 10 ppm sulphur.

It is also mentioned that

“She also disclosed that the Grace Refinery management has requested their crude oil supplier to join hands in building an oil pipeline from the source into Pakistan for its feedstock”.

http://dailytimes.com.pk/business/30-Jul-16/pbit-to-assist-grace-refinery-invest-rs-5bn-in-punjab


Who can be the supplier through pipeline? Iran??

Iran declined to build IPI gas pipeline beyond Iran’s border. Why would they now agree to build the pipeline all the way to Kot Addu? Or did the CEO mean up to Pakistan border only. If so who is going to finance the pipeline up to Kot Addu? Refinery would not run without the crude feed.

Pipeline from the Arab Gulf Countries is put of the question as it has to cross the sea.
Transportation to Karachi by the ships and onward to Kot Addu by pipeline is of course feasible, but a 30-inch 500 mile long crude pipeline would cost additional $1-billion. Would the crude supplier finance it?

GOP would not like to pay more for the refinery produce than the imported price; hence Pakistan would insist that refinery sells the refined products at the import parity price. It is highly unlikely that an upcountry refinery running on imported crude would be able to compete with the state of the art export refineries located in the AG.

Grace refinery has better chance of being competitive if located at or near Karachi and import crude oil in the VLCCs (250 thousand tonne cargo lots) discharged through the floating SPM; similar to the arrangement for ESSAR & RIL refineries in Gujarat.

However we have seen the fate of shore located refineries projects as well. Bosicor refinery never really worked and is now virtually dormant. Byco has been under construction for almost 10 years and still not complete. Indus Refinery project is dead as a dodo.

Finally, if the owners are really Indian, it is stranger still. RIL ( Reliance Industries Ltd) exports refined products equal to all the Arab Gulf refinery exports put together. RIL could meet all of Pakistan's demand except that of furnace oil without any problem, All that is required is a white oil products pipeline.

Besides would Mody Gov't allow $5-billion investment in Pakistan and how would people like Imran Khan exploit this 'Bending over or Chamchagiri" by Punjab gov't to the Indian investors?

I hate to be a spoil sport, but in my opinion this project is nothing more than a flash in the pan. MOU does not mean much; I would only believe when it is ready and operating.

Thank you for this informative post.

I was also wondering the same. The CEO of this company has a background with National Bank and PIA as per her LinkedIn page. The webpage is an year old and is hosted in Karachi and its "whois" information is masked. And more importantly, SS is missing from the sign-off ceremony. A man known for his love of photo-ops, missing from a USD 5Bn agreement? Strange.