Islamabad/Karachi: Pakistan wants to build an oil refinery near the deep-water port of Gwadar to reduce petroleum product imports, a planning official said on Tuesday as the government hosted a Saudi delegation reported to be considering funding the project.
Pakistan is also during the Saudi visit expected to seek financial assistance from its oil-rich ally to avoid another bailout by the International Monetary Fund amid a foreign currency crisis fuelled by a widening current accounts deficit.
The government of new Prime Minister Imran Khan wants to turn the Chinese-funded Gwadar port into "an oil city" to reduce dependence on imported refined fuel, Khusro Bakhtyar, minister for planning, development and reforms, told reporters.
The Saudis were reported by Pakistani newspapers Dawn and The News to be considering investing in what local media say would be a multi-billion-dollar refinery project. Bakhtyar mentioned neither the projected cost nor any confirmed Saudi investment.
Last month, Pakistan invited Saudi Arabia to invest in projects related to the China-funded Belt and Road infrastructure corridor, of which the Gwadar port is the crown jewel of some $60 billion in projects in Pakistan.
"An oil city concept has been developed for Gwadar," Bakhtyar said, saying the country can reduce its $16 billion petroleum import bill if it imports cheaper crude oil to refine instead of more expensive finished products.
"If we set up a refinery and complete Pakistan's requirement through our refinery this oil import bill can be cut by half. And God willing, we will do this." Khan made Riyadh his first foreign trip since he swept to power in elections in July, but there was no confirmation that the Saudi government might offer an economic lifeline.
Pakistan has seen foreign reserves dwindle to about $9 billion, barely enough to meet its external debt through the end of the year, and the rupee has lost more than 20 per cent of its value since December.
Local media have reported that Islamabad is hoping for a deferred-payments deal for Saudi oil to help shore up foreign reserves and possibly even a bridge loan of around $2 billion, but officials on both sides have not commented on any requests.