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The United Arab Emirates is finalizing talks on a $5-billion investment in a crude oil refinery project in Pakistan, local media report, with the construction of the facility likely to begin before this year’s end.
“It is going to be a $5 billion investment between Mubadala Petroleum Company of Abu Dhabi, Pak Arab Refinery Limited (PARCO) and OMV [OMV Pakistan Exploration Gesellschaft],” the Ambassador of the UAE to Pakistan, Hamad Obaid Ibrahim Salem Al-Zaabi, said as quoted by The News International.
The news breaks a day after unnamed sources told Bloomberg that the UAE’s state oil company, Adnoc, was looking for buyers of a minority stake in the company’s natural gas distribution network. The stake was valued at around $5 billion.
The negotiations for the construction of a refinery in Pakistan have been ongoing for some time. Last year, the size of the investment was estimated at $4 billion, to be made through Emirati investment vehicle Mubadala. At the moment, the two sides are putting the finishing touches on the agreement.
Pakistan is one of the countries with the fastest-growing energy demand—rising at an annual rate of 8 percent—and far from enough domestic production to satisfy it. The government was doing its best to make Pakistan a more investor-friendly country as part of efforts to change the status quo in energy supply and demand.
These efforts include opening up local oil and gas blocks for exploration, although so far, the results have not been particularly optimistic. Earlier this year, Exxon and Eni pulled the plug on an exploration project in the Arabian Sea after they failed to strike commercial amounts of oil or gas.
Still, hopes run high that the country would soon enough be able to reduce its dependence on imports with its estimated conventional gas reserves of 20 trillion cu ft and shale gas reserves exceeding 100 trillion cu ft. This certainly makes the country an attractive destination for gas drillers as long as the security situation is stable, which right now it isn’t, amid heightened Kashmir tensions with neighbour India.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.