The petroleum ministry of Pakistan has reportedly announced to that Saudi Arabia has granted an in-principle approval to invest in a new oil refinery in the Gwadar port. As per trusted sources, the state-owned Pakistan State Oil would team up with Saudi Aramco to set up the oil refinery.

Petroleum Minister of Pakistan, Ghulam Sarwar Khan reportedly stated that the details of the capacity and costs of the refinery would be worked out later following the finalization of the formal memorandum of understanding that has been approved by the nation’s cabinet. A Saudi delegation had visited Gwadar port and expressed their interest to invest in the refinery after it was decided that project would be a government-to-government deal, Khan added.

Located in the southwestern province of Baluchistan, Gwadar is reportedly termed as the crown jewel of the USD 60 billion Belt and Road Initiative (BRI) projects of China in Pakistan. Reportedly, Pakistan had invited Saudi Arabia last month to invest in projects associated with the BRI’s China Pakistan Economic Corridor (CPEC). Sources privy to the matter claim the Pakistani government had stated this week that China is its sole true partner.

Apparently, there have been apprehensions that the neighboring Iran may object to a project involving arch-rival Saudi Arabia on its doorstep and any refinery contract requires support from the Baluchistan provincial government. However, Iran’s Ambassador Mehdi Honer Doost stated on Thursday that Iran welcomes investments by Saudi Arabia and other Muslim nations in Baluchistan and has no objections.

Increasing oil prices have soared the current account deficit of Pakistan and the nation now wants a new oil refinery to lower its USD 16 billion bill for foreign petroleum by importing cheaper crude oil. Reportedly, the investment offer from Saudi Arabia has come after Prime Minister Imran Khan made his foreign visit to Riyadh since taking office.