KARACHI: Pakistan and Saudi Arabia have signed a memorandum of understanding (MoU) to facilitate a $10 billion Saudi investment in a new oil refinery in Gwadar, Balochistan, which will have a production capacity of 300,000 barrels per day (bpd) – the first in more than a decade and the largest in the country.

The MoU was signed on Thursday by four Pakistani state-owned petroleum companies – Oil and Gas Development Company Ltd (OGDCL), Pakistan State Oil (PSO), Pakistan Petroleum Ltd (PPL), and Government Holdings Private Ltd (GHPL) – to join hands and provide comfort to the Saudi firm to enter Pakistan with a major investment. The four SOEs would join the project through equity participation.

The government is reportedly in the advanced stages of negotiations with Saudi giant Aramco to execute the greenfield refinery project at the strategic Gwadar Port and wanted to complete the initial paperwork before its tenure ends in two weeks.

The project envisions setting up an integrated refinery petrochemical complex with a crude oil processing capacity of a minimum 300,000 bpd along with a petrochemical facility. The integrated complex shall comprise various components such as marine infrastructure, petrochemical complex, storages for crude oil and refines utilities, pipeline connectivity etc.

The project is expected to boost Pakistan’s energy security, create thousands of jobs, and generate revenue for the country. It is also seen as a sign of deepening ties between Pakistan and Saudi Arabia, which have recently agreed to enhance their cooperation in various fields, including trade, investment, defence, and security.