State Petroleum Refining & Petrochemical Corporation (Perac) is holding talks with potential partners from Malaysia and Saudi Arabia about taking a stake in the Baluchistan refinery project, industry sources say.

The company is understood to have abandoned plans for a joint venture with Iran, despite the 20 August agreement signed between Tehran and Islamabad for a joint venture on the project. The deal was signed by Production Minister Mohammed Asghar and Iranian Oil Minister Gholamreza Aqazadeh.

'The agreement signed on 20 August was not final. Clauses were deferred. To be very frank it will never happen,' says a wellplaced industry source. 'The project will go ahead, but probably with Malaysian and Saudi Arabian partners.' The refinery is expected to cost about $1,200 million, with 75 per cent of the financing coming from international sources.

The refinery was originally planned to process 6 million tonnes a year of Iranian heavy crude oil, producing liquefied petroleum gas, head of barrel crude, gasoline, kerosine, sulphur and coke. It was expected to have a 54-kW captive power capacity and reverse osmosis units. Perac is now looking for other sources of heavy crude.

Bids have been submitted for the engineering design specification contract and an award is expected in the next two-three months. The UK's Babcock King-Wilkinson is being strongly tipped to win the contract (MEED 23 8 96)