PM orders expansion of strategic oil reserves

Chairing a meeting of the Cabinet Committee on Energy (CCoE), the prime minister was briefed on the progress of refinery upgradation projects

ISLAMABAD: Prime Minister Shehbaz Sharif has directed authorities to expand Pakistan’s strategic petroleum reserves while approving key amendments to the Pakistan Oil Refining Policy 2023, a move aimed at strengthening the country’s energy security, attracting investment and modernising the refining sector.

Chairing a meeting of the Cabinet Committee on Energy (CCoE), the prime minister was briefed on the progress of refinery upgradation projects, ongoing energy sector reforms and the implementation of the revised refining policy. He described the modernisation of Pakistan’s oil refineries as a national priority, saying it would improve energy security, reduce reliance on imported fuels and support the production of cleaner, environmentally friendly petroleum products.

The approved amendments focus on upgrading existing refineries to increase production capacity while enabling the manufacture of Euro-V standard petrol and diesel. The changes are also intended to reduce the production of furnace oil and other lower-quality petroleum products, helping Pakistan meet international environmental commitments and curb air pollution.

To encourage foreign investment, Prime Minister Shehbaz instructed officials to organise investment roadshows in Qatar, Saudi Arabia and other Gulf countries to promote opportunities in Pakistan’s refining sector. He stressed that the revised policy must be implemented without delay and warned that negligence in executing the reforms would not be tolerated.

The premier also directed relevant ministries and institutions to maintain close coordination with stakeholders to accelerate the reform process. In addition, he called for improvements in the performance of the Oil and Gas Regulatory Authority (OGRA) to promote greater transparency, competition and investor confidence in the energy market.

Pakistan has been seeking to strengthen its fuel security after recent regional tensions exposed the country’s vulnerability to supply disruptions. The absence of strategic petroleum reserves became a major concern during the conflict that affected oil shipments through the Strait of Hormuz, prompting renewed urgency for energy sector reforms.

The refining policy has faced repeated delays since its formulation. Although finalised in 2023 and approved the following year after years of consultations, implementation stalled when incentives were withdrawn in the federal budget, causing refinery upgrade agreements to be put on hold. Discussions resumed after the government addressed financial concerns raised by refinery operators and pledged measures to revive nearly $6 billion in planned investments.

Industry stakeholders have continued to seek policy stability and tax-related assurances, arguing that unresolved issues, including sales tax on imported equipment and refinery inputs, have created financial challenges that threaten the viability of modernisation projects. The government has indicated that further measures will be introduced to facilitate investment and ensure the successful implementation of the refinery upgrade programme.