Kuwait and Pakistan strengthen energy cooperation with agreement to build oil pipeline and refinery in Balouchistan

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Kuwait and Pakistan strengthen energy cooperation with agreement to build oil pipeline and refinery in Balouchistan

Mon, 03/20/2017 - 15:35
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The Balouch Region in Pakistan (Saknarong Tayaset / Shutterstock)
The Balouch Region in Pakistan (Saknarong Tayaset / Shutterstock)

In wake of talks with the Pakistani government Kuwait has agreed to finance an oil refinery as well as a white oil pipeline in the country's Balouch region.

Kuwait has long been a supplier of oil products to Pakistan and presently the Pak-Arab Company Ltd (Papco) operates a while oil pipeline. The pipeline transports diesel to central regions of Pakistan, where over 60 percent of oil is consumed in the country.

Pak Arab Refinery Limited (Parco) holds 51% majority stake in Papco whereas Shell, Pakistan State Oil (PSO) and Total Parco Pakistan Limited – formerly Chevron Pakistan Limited – have 26%, 12% and 11% shareholding, respectively.

Tank lorries also bring diesel from Karachi to the upcountry, but this method of transport provides thieves with an easy target. Estimates suggest $200 million worth of oil is stolen every year in connivance with lorry drivers.

“The second white oil pipeline will not only protect environment, but it will also be a safe source of fuel supply,” a Pakistani official said.

Pakistan and Kuwait have already been working on setting up the oil refinery in Balochistan and during recent engagements the Arab nation again underlined the importance of establishing the refinery to meet Pakistan’s energy requirements. Crude oil import accounts for more than two-third of the total amount used by local refineries. In the fiscal year 2015, 32% (3.9 million tons) of country’s crude oil and 68% (8.2 million tons) of imported oil was processed by the refineries.

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