Pakistan is pushing forward with an ambitious oil storage scheme that would see Saudi Arabia, Kuwait, and Qatar stockpile petroleum products in bonded facilities on Pakistani soil — at their own expense — giving Islamabad a crucial lifeline during energy supply crises.
Petroleum Minister Ali Pervaiz Malik confirmed that the commercial bonded storage scheme, developed with input from Saudi Aramco and other major energy companies, has been submitted to the Economic Coordination Committee (ECC) for approval, with a decision expected as early as next week.
Under the proposed arrangement, foreign suppliers would be permitted to hold crude oil and refined petroleum products in customs-bonded storage facilities across Pakistan without immediately paying import duties and taxes. The stockpiles could later be sold to local oil marketing companies and refineries, or re-exported at the supplier’s discretion.
The scheme covers a broad petroleum slate: crude oil, petrol, high-speed diesel, jet fuel, fuel oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG). Proposed storage sites include Port Qasim, Karachi Port and Keamari, Hub, Gwadar, Mahmood Kot, and Machike Sheikhupura.
The Petroleum Division is separately seeking ECC clearance for revised policy guidelines governing foreign-supplier-funded imports through customs-bonded storage. The original framework was approved by the ECC in June 2023, but not a single foreign supplier has established a bonded storage facility under that policy to date — a fact the revised guidelines aim to change.
Under the updated framework, foreign suppliers could maintain petroleum stocks in either private or public bonded facilities and move products between approved locations via the national pipeline network without triggering duties or taxes, so long as the products remain within the bonded regime.
Key features of the proposed framework include:
Foreign suppliers would be authorized to store crude oil, petrol, diesel, jet fuel, fuel oil, LPG, and LNG in Pakistan.
Local sales would be restricted to licensed oil marketing companies and refineries, with applicable duties and taxes paid only when products exit the bonded regime for domestic consumption.
Re-exports from bonded storage would be permitted, granting foreign suppliers broad flexibility to move their stocks out of the country.
The Oil and Gas Regulatory Authority (OGRA) would receive daily stock reports from consignees and establish product-specific safety and regulatory protocols for all approved storage locations.
The Federal Board of Revenue (FBR) would continue to oversee customs requirements, while the Petroleum Division would serve as the lead coordinating authority for the policy.
The revised policy has been circulated among the Finance, Commerce, Industries and Production, Maritime Affairs, and other relevant ministries. However, the FBR has maintained reservations over several provisions, particularly those intersecting with the Customs Act and the Sales Tax Act.
Malik underscored the urgency of the initiative, pointing out that Pakistan’s lack of strategic petroleum reserves has left the country dangerously exposed to international supply disruptions. He estimated that maintaining just one month of crude oil reserves would require roughly $500 million, while an underground storage system could demand an additional $300 million to $400 million.
The vulnerability is stark: Pakistan imports approximately 90 percent of its energy requirements, with domestic oil production hovering around 70,000 barrels per day against daily demand of roughly 500,000 barrels. In response, the government is also pursuing increased domestic exploration and developing a broader energy roadmap to cushion against international supply shocks. Turkish Petroleum, Malik noted, is expected to commence offshore drilling operations in Pakistan’s territorial waters.
The storage initiative gains added significance in the wake of disruptions to oil supplies through the Strait of Hormuz, which have underscored the precariousness of Pakistan’s near-total reliance on imported energy.
