Pakistan seeks to set up an oil refinery in its deep-water port of Gwadar with a $10 billion Saudi funding to reduce petroleum product imports. A developed oil-city will potentially reduce the country’s $16 billion petroleum import bill if it imports cheaper crude oil to refine instead of more expensive finished products.
The mega oil city will be constructed on 80,000 acres under the China Pakistan Economic Corridor (CPEC) project and will include a refinery and petrochemical industries. Apart from transportation of imported oil through the Gwadar Port to China, oil will also be stored at the proposed city. Furthermore, the distance to China will be reduced, and it will take just seven days to cover the distance from Gwadar to Chinese border. Saudi Arabia’s financial assistance and general support for the BRI makes it a key player and important partner in CPEC.
Additionally, existing oil refineries are expected to enter into commercial agreements with power producers for efficient utilization of their furnace oil storage capacity and modernization of facilities. Presently, six oil refineries are operating in Pakistan and the government plans to upgrade them to meet international standards.