The Economic Coordination Committee (ECC) of the federal cabinet on Monday approved the Draft Upgrade Agreement under the Pakistan Oil Refining Policy 2023, as amended in August 2026, clearing the way for major investments in existing and brownfield oil refineries.

Pakistan is targeting around $6 billion in investment to modernize its ageing refining infrastructure and increase local production of cleaner fuels.

Under the agreement, refinery upgrade projects will be implemented and monitored within a five-year completion period. The framework also sets out incentives and investment protections for participating refineries.

The planned modernization could raise petrol production by up to 72 percent and high-speed diesel output by around 39 percent, according to sources. It is also expected to enable local production of Euro-V standard petroleum products.

The agreement includes stability clauses and tax incentives to support investment. It also allows foreign currency accounts for importing machinery and equipment required for refinery upgrades.

The policy also seeks to expand Pakistan’s onshore and offshore petroleum storage capacity, strengthening fuel security and improving the country’s ability to manage supply disruptions.

Most of Pakistan’s existing refineries are ageing and have limited capacity to meet rising domestic demand. The upgrades are aimed at improving efficiency, meeting environmental standards and producing higher-quality fuels locally.

Higher domestic refining capacity could reduce reliance on imported petrol and diesel and ease pressure on the country’s import bill and fuel supply over time.

The ECC approval is a key step toward implementing the refinery modernization program and securing the planned investment in the sector.