On Sunday, a high-profile delegation from Saudi Arabia signed seven memorandum of understanding (MoU) and investment agreements with Pakistan, worth $20 billion, to boost bilateral ties.

The seven pacts 

1 – Future cooperation between the Pakistan Standards and Quality Control Authority (PSQCA) and Saudi Standards, Metrology and Quality Organisation. PSQCA is a state body that advises that government on promoting industrial efficiency to improve the competitiveness of Pakistani products in the international markets.

2 - The Saudi Fund for Development (SFD), set up to channel bilateral aid to developing countries, will finance the supply of crude oil and petroleum products to Pakistan. Saudi Arabia is expected to invest in Re-Gasified Liquefied Natural Gas (RLNG) plants to the tune of $4 billion and $1 billion in petrochemical projects over a period of two to three years. The SFD will further make investments of over $1 billion.

3 - Saudi Arabia will assist Pakistan in the production of electricity and its generation. The Saudi-based ACWA Power will bankroll renewable energy projects worth $2 billion.

4 – The Kingdom will establish an integrated refinery petrochemical plant. Saudi Arabia will set up a $10 billion oil refinery in Gwadar, Balochistan. The capacity of the proposed oil refinery will be between 250,000-300,000 bpd (11-13 million tons per annum), according to Radio Pakistan. Further, KSA will study investment opportunities in the refining and petrochemical sectors of Pakistan.

5- Cooperation and promotion of sports between Saudi Arabia and Pakistan.

6 – An MoU was signed in the field of mineral and mine resources from Balochistan and the Khyber Pakhtunkhwa province of Pakistan. The total amount for the project will be $2 billion.

7 – An MoU was signed in the field of developing renewable energy projects.

Additional support

Saudi Arabia has also agreed to give Pakistan $3 billion in foreign currency support for a year and a loan of $3 billion in deferred payments for oil imports. With the oil agreement, Pakistan will receive oil worth $2.5 million every month. This agreement will remain in place for three months.

Pakistan now a destination for long term investment: Dawood

“This is a purely commercial investment by Saudi Arabia,” Abdul Razaq Dawood, the advisor for commerce, textile, industry, production, and investment tells Geo.tv. “The world now considers Pakistan a destination for long term investment. Pakistan is no longer a security concern.”

KSA to invest a total of $1 billion in the food and agriculture projects in Pakistan. Moreover, the Aramco oil refinery will finance projects worth $10 billion.

The next step?

Haroon Sharif, the chairman of the Board of Investment (BoI), says that at the moment it is difficult to estimate the exact volume of the investment. “These MoUs are being signed after a deliberation of three months. The Saudis came to Pakistan twice to discuss the scope of the investment. During the visit, they also visited Gwadar to see it first-hand.”

After the signing ceremony, he adds, a feasibility study will be prepared within 15 days, then after two years, the feasibilities will be completed. Only then will the size of investment be known.

“The oil refinery could be for $1 billion or $8 billion. The refinery will export oil to other countries as well.” After the Saudi visit, says Sharif, the prime minister of Malaysia will also come to Pakistan in March. “He is expected to announce investment worth $2 billion in the education sector of the country.”

With reporting by Ashraf Malkam