Pakistan has failed to attract any foreign oil supplier to establish bonded storage facilities under the 2023 policy. The government is now amending the framework to create a more favourable environment for international investors after recent supply shocks.
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Crisis Exposes Critical Gaps in Reserves
The Iran-US conflict and closure of the Strait of Hormuz exposed serious weaknesses in Pakistan’s energy supply chain. All oil imports transit through this narrow waterway, leaving the country highly exposed to disruptions.
Pakistan remains the only nation in the region without strategic petroleum reserves. India, in contrast, has developed reserves with support from the UAE to protect against similar risks.
Gas supplies from Qatar were also interrupted, worsening shortages during the crisis period.
The absence of reserves means any prolonged supply interruption could quickly trigger widespread fuel scarcity across the country. This would disrupt transport, industry and daily economic activity for citizens.
Committee Pushes for Policy Overhaul
Petroleum Minister Ali Pervaiz Malik has directly engaged key oil-producing countries to invite them to set up storage projects in Pakistan. Kuwait has already expressed initial interest in the proposal.
Land earlier allocated to the UAE for the Khalifa refinery and storages was never developed.
A dedicated committee was constituted on May 7, 2026 to review the existing bonded storage policy and recommend changes. The panel held multiple meetings with major petroleum traders to gather practical feedback before preparing a draft.
The amended policy draft has now been circulated to relevant ministries for their comments.
Under the proposed rules, the government would retain first right of access to oil held in these foreign-managed reserves. Suppliers would still be allowed to export oil from the storages when required.
The petroleum division had briefed the ECC on the need for strategic storages as a core pillar of energy security.
No foreign supplier has established any bonded storage facility under the original 2023 policy.
These reforms form part of broader efforts to strengthen energy security through strategic reserves and greater indigenisation.
Plans to develop gas storages in depleted fields have similarly seen little progress so far.
Success with partners like Kuwait could open doors for similar collaborations with Saudi Arabia and Qatar on both oil and gas storage.
By offering clearer terms and balanced incentives, officials aim to position Pakistan as an attractive destination for long-term regional energy investments.