ISLAMABAD, Nov 13: Abu Dhabi signed an implementation agreement on Tuesday to build a $5 billion refinery which would double Pakistan’s refining capacity.

Under the deal between Abu Dhabi’s International Petroleum Investment Company (IPIC) and the Pak-Arab Refinery, the project will be built at Khalifa Point in the Hub district of Balochistan.

The Khalifa Coastal Refinery Project will have a refining capacity of between 200,000 to 300,000 barrels per day of middle distillate products.

“It will be a large refinery to meet domestic needs and cater to the export market,” said Prime Minister Shaukat Aziz, who witnessed the agreement signing with United Arab Emirates’ Energy Minister, Mohammed bin Dhaen al-Hamli, in Islamabad.

Abu Dhabi, one of the seven members of the UAE, has a 40 per cent stake in the Pak-Arab Refinery at Mehmood Kot in the central province of Punjab.

The IPIC, possibly with other UAE government institutions or companies, will hold an initial 74 per cent stake in the Khalifa project, with the Pak-Arab Refinery holding the remaining 26 per cent stake.

Pakistan, almost totally dependent on oil imports, has an installed refining capacity of 12.82 million tonnes a year (just over 250,000 bpd) from its five refineries. The country consumes about 15 million tonnes of oil products annually.

Mr Aziz said Pakistan’s economy, growing at an average of 7 per cent annually for the past four years, needed energy and fuel to sustain its growth momentum.

Pakistan’s annual energy requirements are expected to surge to 177 million tonnes of oil equivalent by the year 2020 from its current needs of about 58 million tonnes.

The Khalifa refinery is expected to be commissioned by December 2012.

The Pakistani government has announced various concessions for the project that includes 20 years tax-free status and up to 1,000 acres free of cost land.

—Reuters