Pakistan approved amendments to its 2023 Oil Refining Policy on Monday to accelerate the modernization of existing refineries, increase production of cleaner Euro-V fuels and strengthen the country's energy security, with Prime Minister Shehbaz Sharif directing authorities to promote the revised policy among Gulf investors.
Chairing a meeting of the Cabinet Committee on Energy at the Prime Minister's House, Sharif approved the proposed changes to the Pakistan Oil Refining Policy 2023 and ordered roadshows in Qatar, Saudi Arabia and other Gulf countries to attract investment in brownfield refinery upgrade projects, according to a statement from the Prime Minister's Office.
Sharif said upgrading Pakistan's oil refineries was an urgent national priority and a key pillar of the country's long-term energy security strategy.
"Refineries aligned with modern standards will not only meet Pakistan's energy requirements more efficiently but will also reduce dependence on imported fuels and help provide environmentally friendly fuels," the prime minister said.
The policy amendments provide long-awaited clarity for Pakistan's refining sector, which has been seeking fiscal and regulatory support for nearly USD 6 billion in brownfield refinery upgrades, said Bazif Memon, research analyst at Optimus Capital Management. He said the upgrades could reduce furnace oil output by about 80%, nearly double motor gasoline production, increase high-speed diesel output by around 50% and significantly reduce Pakistan's reliance on imported fuels while strengthening long-term energy security.
Muhammad Bilal Ejaz, research analyst at Ismail Iqbal Securities, said the amendments improve the investment case for refinery upgrades by restoring the full seven-year incentive period from the signing of upgrade agreements. However, he said uncertainty remains over the proposed reduction in the diesel sustainability deemed duty and unrecoverable input tax costs, with the industry awaiting the detailed policy notification for clarity.
The committee was informed that upgrading existing refineries is essential to increase production capacity and enable the manufacture of Euro-IV and Euro-V compliant fuels. Officials said cleaner fuels are necessary for Pakistan to meet its international environmental commitments, reduce air pollution and improve fuel quality for consumers.
Sharif directed the relevant authorities to ensure swift implementation of the revised policy, warning that delays or negligence would not be tolerated.
He also instructed the relevant ministries and institutions to maintain close coordination with stakeholders to expedite implementation of the reforms.
Sharif called for reforms to improve the performance of the Oil and Gas Regulatory Authority, saying the changes should enhance competition, transparency and investment across Pakistan's energy sector.
The prime minister reiterated the government's commitment to pursuing sustainable energy-sector reforms, promoting modern technologies and creating an investment-friendly environment.
He also directed authorities to increase Pakistan's strategic petroleum reserves as part of broader efforts to strengthen energy security.
The committee received a detailed briefing on progress in refinery modernization, implementation of energy-sector reforms and the amended refining policy.
Officials said the changes to the Pakistan Oil Refining Policy 2023 are intended to facilitate production of environmentally friendly Euro-V gasoline and diesel while reducing output of furnace oil and other lower-value petroleum products from existing brownfield refineries.
Sharif also praised Petroleum Minister Ali Pervaiz Malik and his team for their work on finalizing the amendments to the refinery policy.
The meeting was attended by Planning Minister Ahsan Iqbal, Finance Minister Muhammad Aurangzeb, Federal Minister Ahsan Cheema, Petroleum Minister Ali Pervaiz Malik, senior government officials and federal secretaries.
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