ISLAMABAD - The Al Motahaden Petroleum Refineries (AMPR) UAE has expressed its interest and willingness to invest $500 million for setting up an oil refinery in Pakistan.

Memorandum of understanding in this regard was signed between Al Motahaden Petroleum Refineries and the Board of Investment on Thursday. The MoU was signed at Board of Investment in the presence of Minister for Petroleum & Natural Resources Shahid Khaqan Abbasi, Ambassador of United Arab Emirates in Pakistan and chairman of BOI.

The initial capacity of the oil refinery, to be set up in KP, will be 15000 to 20000 barrels per day on establishment, which will be enhanced to 50,000 to 100,000 barrels per day.

According the MoU, the AMPR shall form a consortium consisting of local and foreign companies to develop the project and shall, for the purpose, make the required foreign direct investment into Pakistan. However when contacted, an official of the KP energy department told The Nation that this is seventh company showing interest in the establishment of refinery. Six companies are already in contact with the provincial government, the official added.

The official said that the KP government has already allotted land in Khushal Garh area of district Kohat to SPEC for the installation of the of the province’s first oil refinery. According to the 18th amendment, passed by the Parliament in April 2010, the oil and gas producing provinces are entitled to have 50 per cent ownership on oil and gas and mineral resources in their respective regions.

It is pertinent to mention here that a MoU with PSO regarding the installation of refinery with a capacity of 40,000 barrels per day (BPD) on about 400 acres of land in district Kohat-Khyber Pakhtunkhwa was signed by the interim government of KP. After the PTI government’s victory in the province in the general elections of 2013, the project was shelved and the provincial government started searching other investors for the purpose.

After the pursuance of the provincial government Sharjah based MNC, SPEC formally offered KP government to establish oil refinery at any suitable location between Kohat and Karak. The total cost of the refinery, with the refining capacity of 4000 BPD, is $700-$800 million, and according the commitment the SPEC will develop the project in three phases and initially invest $250 million. Initially in the first phase, the refinery will refine 20000 barrels of crude oil per day and after capacity enhancement 30000 to 40000 bpd, the official maintained.

KP is producing about 45000 barrels of oil per day which is almost 50 percent of the total oil production of the country. Due to the unavailability of the oil refinery in KP the crude oil is being transported to the refineries in Attock or Karachi. Besides creating employment opportunities for the people of the impoverished southern districts of KP, the refinery would help improve the overall availability of POL products across the country as well as help in saving sizeable foreign exchange, the official maintained. According to one estimate Khyber Pakhtunkhwa has natural gas recoverable reserves of some 9 trillion cubic feet and oil reserves exceeding 500 million barrels.

The official said that Al Motahaden Petroleum Refineries AMPR is the choice of federal government and the KP is keen to work with them. “We don’t have any priority whoever comes first and start work will be welcome by the KP government,” the official said.

However the official said that no place has been selected for the establishment of the refinery. “AMPR will first conduct their feasibility and in the light of that they will choose a location for the installment of the refinery,” the official added.

Chairman OGDCL, Chief Executive Officer KPOGCL, Director Energy KPBOIT and other federal and provincial officials also attend the meeting.