The Abu Dhabi government will set up a $5 billion (Dh18.25 billion) Khalifa Coastal Refinery (KCR) in Pakistan, a senior diplomat told Gulf News.
A delegation from the Abu Dhabi International Petroleum Investment Company (IPIC), led by UAE Minister of Energy Mohammad Bin Dha'en Al Hamili, will sign an agreement tomorrow in Islamabad with the Ministry of Petroleum and Energy Resources.
The agreement will be signed in the presence of Pakistan Prime Minister Shaukat Aziz.
"This is the largest single foreign direct investment (FDI) ever made in Pakistan," said Bilal Pasha, Commercial Counsellor at the Pakistan Embassy in Abu Dhabi.
Last year, FDI from the UAE into Pakistan stood at $800 million out of a total $8 billion received worldwide.
This is also the largest investment in the oil and gas sector in Pakistan. The UAE was also the single largest contributor of FDI in 2005-06, with total investments standing at $1.6 billion.
The IPIC will hold a 76 per cent stake in the project, while the Pak-Arab Refinery Company will have 24 per cent in the crude oil refinery company - Khalifa Coastal Refinery (KCR).
IPIC is the Abu Dhabi government's enterprise responsible for foreign investments in the oil and chemical industries.
The KCR will be built at a strategic location along the coast of the Arabian Sea near Hub in Balochistan province of Pakistan.
The Pakistan government has already allocated 2,000 acres and the area will be called Khalifa Point - named after President His Highness Shaikh Khalifa Bin Zayed Al Nahyan.
Construction of the mammoth project is expected to start in January next year. Production is slated to start in December 2012.
"The refinery will have the capacity to produce around 100,000 barrels of diesel per day and around 35 to 45 million barrels a year," said Pasha.
He said that KCR would not only help Pakistan cope with the increasing demand for diesel fuel and petroleum products in the country, but also help develop several downstream industries.
The consumption of petroleum products in Pakistan in 2005-06 was 16 million tonnes. The demand is expected to increase to 26 million tonnes per year by 2017-18.
The production of refined products by the local refineries in the country during the 2005-06 financial year was 11 million tonnes. The deficit in product imports stood at a total six million tonnes last year.
"The KCR will bridge the gap and will help the country have surplus refined petroleum products," Pasha added.
He said the KCR would generate more than 8,000 jobs, including skilled and unskilled labour, and it will benefit the local population in Balochistan province.
The delegation from the UAE to Pakistan will also include Khadem Al Qubaisi, managing director of IPIC; Mohammad Al Muhairi, the company's general manager, and Dr M. Fazal Azeem, senior adviser.
Pakistan Ambassador to the UAE Ehsan Ullah Khan and the UAE Ambassador in Islamabad Ali Al Shamsi will also attend the agreement signing ceremony.