Exclusive: Mubadala to take investment decision on $6bn Pakistan refinery

The facility could have the capacity to process 250,000 barrels per day of crude

Mr Al Kaabi said the agreement could result in potential opportunities in Indonesia for Mubadala and its portfolio companies. Chris Whiteoak / The National

Mubadala's Petroleum and Petrochemicals division is finalising an investment decision on the planned Pak Arab Refinery in Pakistan by the end of 2019, a project that could cost up to $6 billion (Dh22.04bn), its chief executive said on Monday.

The hydrocarbons unit, which is a division of Abu Dhabi strategic investment fund Mubadala Investment Company, had earlier considered development of around 200,000 barrels per day of refining capacity,which has been since revised up, in the Pakistani port city of Karachi, with local developers.

"We are working with our Pakistani counterparts to progress on the engineering studies. We're expecting FID [final investment decision] in the near future. We're targeting end of 2019," the division's head Musabbeh Al Kaabi told The National.

"The base plan is 250,000 bpd of oil and we’re talking about $5.5 to $6bn."

In an earlier interview with The National, Mr Al Kaabi said the project would be "a massive investment in oil and gas in Pakistan" with the refinery likely to use Abu Dhabi crude.  If the deal materialises, it would be one of the largest foreign direct investments for Pakistan.

Meanwhile, one of Mubadala's subsidiaries, Mubadala Petroleum on Monday said it had agreed to acquire a minority stake from Italian energy company Eni' in one of Egypt's offshore concessions, its second acquisition in the country.

The company will control 20 per cent of Egypt’s Nour North Sinai Offshore Area concession, which Eni operates through its subsidiary IEOC.

Mubadala Petroleum first entered North Africa’s biggest economy in June, when it acquired a 10 per cent participating interest in the Shorouk concession from Eni, which contains the massive Zohr gas field.

Russia, South East Asia and the Middle East will remain the priorities for upstream investment for Mubadala Petroleum and Petrochemicals, according to its chief.

Mubadala Petroleum and the Russian sovereign wealth fund finalised a deal to acquire 49 per cent in an oil venture from Gazprom Neft in September.

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Exclusive: Mubadala's petroleum and petrochemicals wing eyes lower cost barrels

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Mubadala Petroleum and Petrochemicals, which has around $12bn worth of projects currently awaiting final investment decision, will only green light upstream projects that are lower-cost resources, said Mr Al Kaabi. The company was also pushing ahead with its downstream projects that are being developed on the back of the US shale gas boom.

"Currently we’re spending enough time to create more value from the transactions we have done," he said. "We’re talking about more than $12bn worth of investments that we took a final investment decision and I have a responsibility now to deliver them."

He cited the expansion of Nova Chemicals in Canada, which the firm said costs $1.8bn, as one downstream project they are currenlty seeing through to completion.

“[It will be] a nightmare for any investor [should] costs overrun on these projects. So we put all our efforts now to ensure we deliver these projects,” he added.

Its fully-owned subsidiary Cepsa, which earlier this year took a 20 per cent stake worth $1.5bn in Abu Dhabi National Oil Company's offshore SARB and Umm Lulu fields, was continuing to focus upstream as well as on the development of a linear alkyl benzene refinery with the state producer. LAB is a compound that finds uses in industrial detergents.

Plans for an initial public offering of Cepsa, which Mr Al Kaabi had disclosed to The National in an interview in March have been put on hold he said, citing "volatility in the global capital markets".

“We are a confident investor and we took the decision a few days before the deadline to pull the transaction and explore this sometime in the future, when the market is attractive to us,” he said.