COMMENT: Pak Reactivates Saudi, Kuwaiti Offer For Refinery in Gwadar, Balochistan

To meet fossil fuel demands till 2040, Pakistan has reactivated stalled Saudi & Kuwaiti oil refinery offers in Balochistan. The aim it seems is value-addition than just import of crude/petroleum from the region’s oil exporters. Storing & marketing them beyond may also be on the wish list.

Express Tribune reports that Pakistan and Saudi Arabia are inching toward signing $10bln deal for an oil refinery project in Gwadar, Balochistan –it had stalled for the past several years.

The second proposal on the table is of the UAE’s –$6bln investment decision thru PARCO, to set up Khalifa Refinery Project in the coastal area of Balochistan –it will have the capacity of 400,000 barrels per day.

“If the existing refineries increase their capacity to 400,000 barrels (per day) and one additional refinery is set up with the same capacity, this will be enough to meet the country’s fuel demand till 2040,” petroleum industry officials stated. More here.

IRSHAD SALIM from Karachi adds: An Islamabad-based analyst says “This is all gup shup (rumors). Nothing serious.” And a former head of a Think Tank who also had a stint as Pak envoy to Riyadh agrees.

“I will tend to agree with this analyst”, a defense and security observer in Rawalpindi says. “The Saudis may be serious, (but) we are neither serous nor capable.” He says that “democratic dispensation of the last 15 years has created serous capacity issues within our state institutions and ministries”, a view I also and many observers hold.

“No, not a gup shup, it’s a reality..12Bln Dollar deal is going to be signed next week,” said Mr. Gholam Murtaza, an energy & power media professional based in the capital, when asked for his comment.

Dr. Syed M. Ali, a senior analyst in ISB agrees that the proposal has been reactivated.

Energy analyst Rashid Husain Syed said: “Although I am not privy to any inside info, yet to me it looks ‘gup-shup’. Has there been any changes in ground realities, since last it was talked about. I know how disappointed Khalid Al-Falih was after Pakistan visit. The only change has been that SS is in Saudi and he wants to generate some positive vibes. I may be wrong, yet to me it is still a speculation”.

Mr. Ishaq Saqi, a professional with decades of experience in petroleum and geology, shared his thoughts with me as follows:

Let’s not mix science and politics here. We can keep on going in circles if continue arguing on the past. Let’s focus on future , be pragmatic and learn from the ground truths. Europe has spent billions of euros on going electric and walking away from coal and oil in last 10 years. Now they have got to the conclusion that they cannot survive this winter without gas. Their gas storages are now going to rescue them while their economies are struggling. The fact is oil and gas is reality and it could take decades to replace. Even electric vehicles and batteries need oil to manufacture. Oil and gas will continue to be almost 80 % of energy mix in foreseeable future in the world. Each country has its own energy dynamics and accordingly adopt their energy strategy. Given our situation, we could have a reasonable blend of hydro, thermal (oil, gas, coal), geothermal, solar, wind and nuclear. As far as sources are concerned we are in shape. All we need is a vision, strategy and a plan.

He added:
We as a nation have to learn energy conservation which is imperative to cope up with ongoing energy challenges. However, for a long term “affordable“, “sustainable” and a “secure” energy supply, we need an integrated and diversified energy solution. This would cover a broad spectrum of energy sources both renewable as well as nonrenewable along with a reasonable storage facility to leverage down-cycle in global energy prices. As we know, global oil prices go in cycles, and there is always an opportunity to benefit low oil prices if and when happens. With gradual increase in reliance on imported fuel and bearing in mind our geostrategic location and threats, it is vital to have enough wiggle room in the form of energy storage to survive. Investment on these sorts of strategic projects may sound a bit hard to justify on short term but eventually they pay off in the long term.

He further added:

Practically and realistically, we are not in a position to implement any workable integrated energy plan due to our political will and priorities and also we don’t have the money to pay for gas for current requirement. In this condition it is day-dreaming of gas or oil storage in sub-surface or at surface. Where from we will get money for such additional purchases? Therefore, we should work seriously on energy conservation, improving efficiency and finding new sources for energy. conservation and finding new sources of energy. Support private sector by giving tax incentives to create such resources and utilize it properly. We have developed a society since seventies to live off Govt/public money and subsidies, and free lunch and handouts. We have lost dignity and money has more importance than dignity. Let’s start with stopping subsidies to sugar milks, fertilizer plants, industries, which don’t export; let’s stop being a consumer society; it only makes banks, importers and traders rich. We have neglected engineering industry, which has just become assemblers of imported parts. Our agriculture is primitive where we waste water-use, wrong fertilizers, and cultivator –all these only make the middleman rich. 90% of our nation has become middlemen, petty traders, hoarders, living off others misery. We need to teach at grassroot level how to live simple, honestly and abide the law, but with such rulers I don’t see that teaching will ever start. So at least at our personal level each one of us should decide that we will not support corruption, nepotism, theft, breaking of law and be honest. Let’s starts from our homes.

My take: I hope the 12 billion dollar investment deal goes through –with a caveat, that our movers and shakers don’t lose focus on renewables in the energy mix, and of course the climate change challenges ahead.

Honorary contributors to DesPardes: Adil Khan, Ajaz Ahmed, Anwar Abbas, Arif Mirza, Aziz Ahmed, Bawar Tawfik, Dr. Razzak Ladha, Dr. Syed M. Ali, G. R. Baloch, Haseeb Warsi, Hasham Saddique, Jamil Usman, Javed Abbasi, Jawed Ahmed, Ishaq Saqi, Khalid Sharif, Majid Ahmed, Masroor Ali, Md. Ahmed, Md. Najibullah, Mushtaq Siddiqui,, Mustafa Jivanjee, Nusrat Jamshed, Shahbaz Ali, Shahid Hamza, Shahid Nayeem, Shareer Alam, Syed Ali Ammaar Jafrey, Syed Hamza Gilani, Shaheer Alam, Syed Hasan Javed, Syed M. Ali, Tahir Sohail, Tariq Chaudhry, Usman Nazir