In a significant development for Pakistan’s energy sector, a Chinese investment company has committed to investing $1 billion in Pakistan Refinery Limited (PRL) to enhance its production capabilities. This investment aims to double PRL’s production capacity from 50,000 to 100,000 barrels per day and transition the refinery to a deep conversion process.
This upgrade will enable PRL to produce Euro 5-compliant high-speed diesel (HSD) and petrol while phasing out furnace oil.
A key condition of the investment is the exclusion of government involvement in the deal, a stipulation also echoed by the China Export & Credit Insurance Corporation (SINOSURE), which is providing the financing facility. The Chinese firm has also required that repayments be made in U.S. dollars. PRL has assured the investors that it will generate the necessary dollars for repayment through the export of petroleum products.
The upgrade is expected to significantly boost PRL’s output, with petrol production projected to increase from 250,000 tons to 1.5 million tons annually, and HSD output from 600,000 tons to 2 million tons.
In October 2023, PRL and China’s United Energy Group (UEG) signed a Memorandum of Understanding (MoU) to formalize their collaboration. Additionally, PRL has entered into agreements with Honeywell UOP and Axens to facilitate the production of Euro 5 gasoline and diesel.
This initiative is part of a broader investment strategy under the amended Pakistan Oil Refining Policy 2023, which encourages refineries to upgrade their production facilities.
