Modernise refineries to strengthen energy security

September 25, 2026

The decision to move ahead with the modernisation of four major oil refineries is an important opportunity to address a long-standing weakness in the country’s energy sector. Attock Refinery, National Refinery, Pakistan Refinery and Cnergyico Petroleum have signed agreements with the government under the Brownfield Petroleum Refining Policy 2026. The projects are expected to attract around $5 billion over the next five years.

For a country that spends a large amount of foreign exchange on imported petroleum products, modernising domestic refineries makes economic sense. Pakistan should not remain heavily dependent on imports when it has an existing refining industry that can be upgraded to produce more useful and cleaner fuels. The planned changes are significant. Petrol production is expected to increase by 72 per cent, while high-speed diesel production could rise by 39 per cent. At the same time, furnace oil production is projected to fall by 63 per cent. This change in the product mix is important because the country needs more petrol and diesel and less low-value furnace oil.

The move towards Euro-V fuel standards is another positive aspect of the policy. Better-quality fuel can help reduce harmful emissions and improve environmental standards. However, these targets will only matter if the projects are completed on time and the promised investments are properly used.

The estimated $5 billion investment could also reduce pressure on Pakistan’s foreign exchange reserves. Industry estimates suggest that modernising the refineries could save around $1.5 billion annually in foreign exchange. Such savings would be valuable for an economy that regularly faces pressure from its import bill.

The government has offered tariff protection and other incentives to encourage the industry. These incentives should be linked with clear performance targets, transparency and strict timelines. Public support should not become a permanent benefit without measurable results.

The absence of PARCO from the agreements also deserves attention. If its existing technology is already relatively modern, the government should nevertheless examine whether further improvements are needed.