ISLAMABAD -  Russian investors have agreed to setup a medium size refinery in Khyber Pakhtunkhwa.

A Memorandum of Understanding (MOU) in this regard was signed here between the delegation of Russian investors from Inter Rao Engineering & HIMMASH APPARAT - a leading EPCC contractor through local partners ORPHEUS - and Khyber Pakhtunkhwa Oil & Gas Company Limited (KPOGCL) for establishment of medium size refinery in district Kohat to enhance activities in oil & gas sector of the province.

Sources privy to the development told The Nation that the Russian company has agreed to invest $200 million in the refinery. The company will discuss the plan with its Turkish partner and it is hoped that by December 2017 the company will achieve its financial close. The company is developing its high tech machinery in Russia while the lower tech is being developed in Turkey. “We have requested them to develop some heavy machinery in Heavy Mechanical Complex in Pakistan,” they said.

The local manufacturing of heavy machinery will help saving time and money on the transportation of heavy equipment from abroad, the source said. In their next visit to Pakistan the Russian company will discuss the possibility of manufacturing heavy machinery with the management of the HMC, they added.

During their three-day visit, the delegation visited Khushal Garh in Kohat and Karapa in Karak and has shown interest in investment in the exploration in the provinces, the source said. Meanwhile, a press release issued here stated that the meeting was held between KPOGCL CEO Razi Uddin and visiting delegation headed by Yaroslav Gavrylendo, Advisor to CEO Inter Rao Engineering and Narovlyanski Alexander, Head of Export of HIMMASH APPARAT to discuss way forward on the project. KP government is fulfilling their responsibility for providing investors with one window stop shop facility assuring full cooperation to visiting delegation, the statement said.

Considering the crude/condensate production from KP, being the leading player amongst other provinces, investors have showed keen interest in the project. Letters of Intent has already been issued by Russian investor through their consortium to KP government and they are keen to take this project in next phase as stated by KPOGCL CEO Razi.

As per the MoU terms, interested group will execute detailed feasibility for this project. KPOGCL also arranged a detailed site visit to the Russian delegation to district Kohat and showed the potential site for setting up the crude/condensate refinery. The delegation lauded the efforts of KPOGCL for facilitating new investors in the region on fast track basis and assured to take this project forward subject to their approval from Russia to enter Pakistan’s market.

KPOGCL is taking all necessary steps for enabling the vision of KP government to ensure, “Energy Security for Pakistan”. It is pertinent to mention here that currently the KP government is working on the establishment of three refineries with three different investors, including FWO, Chinese company and the Russian company.

KP 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.