The local Pak-Arab Refinery Company (Parco) is negotiating with Japan's JGC Corporation about the award of an engineering, procurement and construction (EPC) contract for a new oil refinery, industry sources say. JGC was the low bidder for the contract, estimated to be worth up to $750 million, the sources say. Parco received one other bid for the work from Chiyoda Corporation, also of Japan, Germany's Kloeckner & Company and the UK's Foster Wheeler. Italy's Snamprogetti and France's Technip were prequalified for the work but did not submit bids. An official award for the EPC contract is expected to be announced in August.

The 100,000-barrel-a-day refinery, to be located at Multan, will be Pakistan's first major refinery situated away from the coast. Most are located near Karachi where crude oil is imported for refining. However, Parco estimates that about 65 per cent of demand for refined products comes from the northern areas of the country. Locating the refinery nearer to the markets reduces the need for expensive transportation of refined products, the company says.

Financing for the project is expected to include $500 million in export credit guarantees and $100 million in commercial loans (MEED 8:8:97).