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Analysis: Pakistan, Saudi Arabia in talks to develop $10 bil oil refinery in Gwadar


Islamabad — Pakistan and Saudi Arabia are in talks to develop a 200,000-300,000 b/d oil refinery in Balochistan's Gwadar district for $10 billion -- a move that will help alleviate Pakistan's trade deficit, mounting foreign debt, and depleting foreign exchange reserves.

The agreement is due to be signed in February, coinciding with an official visit by crown prince of Saudi Arabia Mohammad Bin Salman to Pakistan, and construction is set to commence by year end, said officials with the ministry of petroleum this week.
The project, led by state-owned Saudi Aramco, will be Saudi Arabia's biggest investment in the south Asian country, Pakistani Petroleum Minister Ghulam Sarwar Khan said, and will add to an investment boom in Pakistan's energy sector, particularly from China and Saudi Arabia.
Saudi Arabian companies have been looking to expand trade with their Pakistani counterparts, and invest in the country's mining, refining, petrochemicals and renewables such as solar and wind power generation, officials said. Several agreements will be signed within weeks, including power and petrochemical projects, said Haroon Sharif, Chairman with Pakistan's Board of Investment.
Saudi Arabia has also approved financial assistance to Pakistan worth $3 billion, of which $2 billion have been paid to help Pakistan shore up its foreign exchange reserves, Pakistan Finance Minister Asad Umar had said in October 2018. It has also approved the establishment of an oil credit system to facilitate the deferral of oil payments worth $3 billion, an official of the ministry of finance from Islamabad said January 14.