Shafaqna Pakistan: Pakistan is planning to expand domestic storage capacity for crude oil and refined petroleum products in an effort to strengthen its energy security, according to a government document shared with oil producers and several major global trading firms.
Despite relying on supplies passing through the Strait of Hormuz for nearly 90% of its oil and liquefied natural gas imports, Pakistan currently lacks strategic petroleum reserves.
This vulnerability has left the country exposed to supply disruptions caused by the Iran conflict, particularly as its lending programme with the International Monetary Fund restricts the government’s ability to maintain expensive state-owned emergency stockpiles.
According to the document reviewed by Reuters, the energy ministry has proposed the development of strategic petroleum reserves alongside commercial storage facilities through bonded terminals, refineries and oil marketing companies. The plan also calls for increased oil and gas exploration and production, refinery modernisation and consolidation of the downstream energy sector.
“Pakistan’s oil security requires both emergency reserves and stronger local supply capacity,” the ministry stated in the document.
It shared the proposed framework with Saudi Aramco, Abu Dhabi National Oil Corp, Kuwait Petroleum Corp, QatarEnergy and PetroChina, as well as oil trading firms Vitol and Trafigura and storage operator Vopak.
Trafigura and Vitol declined to comment. The other companies and the petroleum ministry did not respond to Reuters’ requests for comment.
Petroleum Minister Ali Pervaiz Malik said last week that building reserves was “easier said than done”, especially for a country in an IMF programme with severe fiscal challenges, but added the government was trying to move quickly from planning to implementation.
Bonded storage, strategic reserves and energy infrastructure
Under the bonded storage plan, international suppliers and traders would be allowed to hold petroleum stocks, creating commercial inventories that could support domestic supply during emergencies. The government could also allow companies to store fuel for re-export.
The document did not spell out details such as incentives, pricing, tax, foreign exchange, offtake or ownership terms, or whether companies would be expected to invest in storage infrastructure.
The document also calls for an energy infrastructure corridor around the city of Hub and Port Qasim, including single-point mooring, storage and pipeline connectivity, to reduce reliance on smaller, costlier shipments.
Source: Express Tribune
