Başbakan Şerif’ten stratejik petrol rezervlerini artırma ve rafinaj politikasında değişiklik talimatı

PM orders increase in country's strategic petroleum reserves; changes to oil refining policy approved

Prime Minister Shehbaz Sharif on Tuesday directed authorities to increase the country’s strategic petroleum reserves as a cabinet committee approved amendments to the oil refining policy. Pakistan has been planning to boost domestic storage for crude oil and refined products to increase its energy security, it emerged in May. With no strategic petroleum reserves, the country has been left exposed to oil supply shocks resulting from the US-Iran war that has choked supplies through the Strait of Hormuz. On Tuesday, PM Shehbaz chaired a meeting of the Cabinet Committee on Energy (CCoE) during which amendments to the Pakistan Oil Refining Policy 2023 were approved, according to a statement issued by the Prime Minister’s Office (PMO). The meeting was given a detailed briefing on the progress of upgradation of oil refineries in the country, reforms in the energy sector, and implementation of the policy. “The upgradation of oil refineries is an important need of the time and is a key pillar of Pakistan’s comprehensive energy security system,” the PMO quoted the premier as saying. He stated that refineries aligned with modern requirements would not only better meet the country’s energy needs but would also help reduce dependence on imported fuel and provide environment-friendly fuel, the statement said. The Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries 2023 was finalised in August 2023 and approved in April 2024 after six years of consultations, but it came to nought since the federal budget for FY24-25 practically cancelled the policy. Regarding the approved amendments, the CCoE was told that the upgradation of existing refineries was inevitable to increase their production capacity. It was informed that the amendments to the Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries 2023 aimed to ensure the production of environment-friendly petrol and diesel compliant with Euro-V standards and reduce furnace oil and low-quality petroleum products. The CCoR was informed that production of fuel meeting Euro-IV and Euro-V standards was essential for fulfilling Pakistan’s international environmental commitments and reducing air pollution. PM Shehbaz ordered that roadshows be held in Qatar, Saudi Arabia and other Gulf countries to promote the amended policy for brownfield refineries. “The government will continue to take all possible measures to introduce sustainable reforms in the energy sector, promote modern technology, and provide a conducive environment for investment,” the premier was quoted as saying. He emphasised that “effective and timely implementation of the new policy must be ensured, and no negligence or delay in this regard will be tolerated under any circumstances”. The prime minister directed the relevant ministries and institutions to expedite the reform process while maintaining close contact with all stakeholders, the PMO statement said. PM Shehbaz also directed that reforms be introduced to improve the performance of the Oil and Gas Regulatory Authority (Ogra) and meet market needs so that competition, transparency and investment in the energy sector were promoted, according to the PMO. The meeting was attended by Finance Minister Muhammad Aurangzeb, Petroleum Minister Ali Pervaiz Malik, Economic Affairs Minister Ahad Khan Cheema and Planning Minister Ahsan Iqbal, along with relevant federal secretaries and senior government officials. After the budget for FY24-25 nullified many of the incentives in the revised policy for brownfield refining projects, the refineries backed off at the last moment from signing upgradation agreements. However, in May 2025, all five refineries were ready to initiate upgrade projects involving a $6 billion investment after the government addressed their key demand for clearance of their Rs34bn stuck-up funds through petroleum pricing. Then, after the US-Iran war broke out this year, the oil disruption compelled the government to dust off its petroleum refining policy, after it could not be enforced due to flawed negotiations with the Inter­nat­ional Monetary Fund (IMF). The government had assured the refining sector of corrective measures in the budget for FY26-27 to revive $6 billion in investments for refining upgrades and expansion. On the other hand, the refineries had linked the investment revival to four major enabling guarantees. They wanted a stability clause in the refining policy during the three to five years of the implementation phase. Moreover, the exemption of sales tax on petroleum products had been identified as the key issue affecting the viability of upgradation projects. Under the IMF programme, the authorities committed not to grant any tax exemptions already promised to the refineries. As a result, although petroleum products were exempt from sales tax, the required equipment, materials and supplies were subject to sales tax and other duties without input-output adjustments, creating cash flow problems for the refineries. Last week, US firm Honeywell Technologies discussed a proposed plan to modernise and expand Pakistan’s refinery sector in a meeting with the finance minister.