Pakistan seeks Saudi investment for refinery expansion, aiming to boost capacity 

Pakistan is actively seeking Saudi investment to support the expansion of Pakistan Refinery Limited (PRL), with the aim of doubling its crude processing capacity and meeting stricter environmental standards. Petroleum Minister Ali Pervez Malik recently visited Saudi Arabia, where he briefed investors on the Refinery Expansion and Upgrade Project (REUP), The News reported.  

During the trip, he held meetings with top PRL and Pakistan State Oil (PSO) officials, forming a dedicated team to engage Saudi investors for the project. PRL, a subsidiary of PSO, is central to the country's energy infrastructure.

The REUP aims to increase PRL’s crude processing capacity from 50,000 barrels per day (bpd) to 100,000 bpd, adopting deep conversion refinery technology. This upgrade will help PRL produce Euro V-compliant fuels, aligning with stringent environmental standards.

Despite previous attempts to attract foreign investment, those efforts did not yield the desired results. PRL, a hydro-skimming refinery, processes both imported and local crude oil to meet Pakistan’s strategic fuel requirements. The refinery currently produces essential products like LPG, motor gasoline, kerosene, jet fuels, high-speed diesel, furnace oil, and naphtha.

A study by Pakistan Credit Rating Agency (Pacra) revealed that PRL produces 40-45% of the country’s furnace oil, which contains a high sulphur content and is considered undesirable.

The government's refining upgrade efforts are part of the brownfield refinery policy, which estimates an investment of $4-5 billion. The policy's goal is to upgrade existing refineries, ultimately creating five deep-conversion refineries with a combined crude processing capacity of 350,000 bpd.

However, setbacks occurred following the government’s decision to withdraw sales tax exemptions on petroleum products in the FY25 finance bill. The International Monetary Fund (IMF) has opposed imposing a partial sales tax on petroleum products, warning that the introduction of an 18% sales tax could significantly raise fuel prices, making upgrades more challenging.

The government remains committed to modernizing the country’s refining sector, with PRL’s upgrade being a critical component of this effort to meet Euro V standards and reduce furnace oil production.