Govt setting up bonded oil storage to facilitate Gulf producers

LAHORE: Federal Minister for Petroleum Ali Pervaiz Malik has said Pakistan is moving to establish its first commercial bonded oil storage system, a facility that would allow Gulf producers and global commodity traders to store petroleum products in the country for onward export, while giving Islamabad access to some of these stocks during emergencies. The minister said the proposal, designed to position Pakistan as a regional storage and distribution hub and to bolster fuel security, would be placed before the Economic Coordination Committee (ECC) for approval on Monday (today). He was speaking at a roundtable titled “From State Control to Competition: Rethinking Pakistan’s Energy Sector, ” organised by the Business Recorder Forum on Saturday. READ MORE: Pakistan expects $5bn investment to transform refineries soon: petroleum minister Malik noted that Pakistan currently has no dedicated national strategic reserve and depends entirely on commercial oil stocks that could be drawn upon in the event of a major global supply disruption. Under existing regulations, refineries are required to hold crude oil stocks equal to five to seven days of supply, while oil marketing companies must maintain refined product stocks for twenty to twenty-five days. The minister said the government also plans to deregulate the gas sector, restructure and unbundle the Sui companies, and move gradually toward a single market-clearing price, under a reform roadmap being developed with technical assistance from the World Bank. He disclosed that a proposal to separate the transmission, distribution and energy businesses of the Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGCL) had been discussed with World Bank officials. The reforms are intended to foster a more competitive gas market, with the Oil and Gas Regulatory Authority (OGRA) assuming a stronger role in regulation and oversight. On LNG supplies, Malik said Pakistan would continue close coordination with Qatar to ensure uninterrupted deliveries, adding that efforts were under way to secure additional gas to meet national demand. Discussing circular debt, the minister said the government was working to contain it without raising tariffs, and that negotiations with the International Monetary Fund (IMF) were continuing, with a resolution mechanism expected once the next IMF mission arrives. He said the government also intends to replace the existing Liquefied Petroleum Gas (LPG) quota system with competitive bidding to improve transparency, and that five-tonne lots had already been introduced on a pilot basis. On oil marketing companies, Malik called for clear targets and milestones for phased deregulation of the sector and said companies should be made responsible for digitalising the petroleum supply chain end to end. He added that Pakistan was reviving offshore exploration after two decades under Prime Minister Shehbaz Sharif, with friendly countries as well as Mari Petroleum, Pakistan Petroleum Limited (PPL) and the Oil and Gas Development Company Limited (OGDCL) taking part. Chaudhry Muhammad Waheed, Chairman of the Pakistan Ethanol Manufacturers Association (PEMA), said discussions with government officials, including Deputy Prime Minister Ishaq Dar, had focused on the domestic ethanol industry and fuel-blending policy. Both sides, he said, had agreed that a voluntary ethanol blending policy should be permitted, subject to financial viability for refineries and ethanol producers alike. Dr Naveed Arshad, a professor at the Lahore University of Management Sciences, warned that Pakistan risks repeating its recurring energy crises unless it adopts a clear, long-term strategy, cautioning against continued reliance on short-term fixes. He said the country’s heavy dependence on oil and gas imports and on the same global supply chains represented a core vulnerability, and called for closer coordination between the Petroleum Division and the Power Division, which he said currently operate in isolation from each other. He argued that policy decisions should be guided by total system cost across the energy value chain, and proposed shifting consumer energy use toward electricity while diversifying power generation sources to cut reliance on imported fuel. He also pointed to battery energy storage as an emerging force in the sector, comparing its potential impact to that of artificial intelligence in the technology industry, and cited research identifying nearly fifty possible use cases for battery storage across the power chain. Dr Arshad said policy debate in Pakistan remained too focused on short-term “firefighting” and called for a sustained national conversation on the sector’s direction over the next two to three decades. HUBCO Chief Executive Officer Kamran Kamal said Pakistan’s energy sector remained crippled by circular debt, high electricity tariffs and outdated transmission infrastructure that limited the use of cheaper fuels, pointing to deep structural and financial weaknesses in the power market. Muhammad Kashif, CFO of the Associated Group, urged the government to deregulate the gas sector and open LNG imports to greater private sector participation to secure cheaper supplies. Salman Saleem, Country Head of ZIC Oil, said oil marketing companies were facing serious financial and operational strain due to long-delayed margin revisions, policy uncertainty and liquidity shortages. Faisalabad Electric Supply Company (FESCO) Director Adil Bashir and Kixx Oil Managing Director also shared their perspectives during the forum. Copyright Business Recorder, 2026

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