Key Takeaways
- Four local refineries have signed upgradation agreements with the government for $5bn in five years.
- The agreements are part of the Brownfield Petroleum Refining Policy 2026, approved in July 2023.
- The upgrades aim to improve product quality and increase production, enhancing energy security.
Four of Pakistan’s five local refineries have signed formal agreements with the government to upgrade their refining technologies, with an estimated investment of $5 billion over five years. The agreements, signed under the Brownfield Petroleum Refining Policy 2026, were welcomed as a significant milestone for the country’s refining industry.
The upgradation agreements were signed by the managements of Attock Refinery, National Refinery, Pakistan Refinery, and Cnergyico Petroleum, along with the Inter State Gas Company (ISGC), a subsidiary of the petroleum division. These agreements are expected to modernize the country’s refining infrastructure and enable the production of cleaner Euro-V fuels.
Adil Khattak, the chairman of the Energy Committee of the Overseas Investors Chamber of Commerce and Industry (OICCI) and CEO of Attock Refinery, termed the signing a historic milestone. He stated, 'These projects will fundamentally modernise Pakistan’s refining infrastructure, enable production of cleaner Euro-V fuels, substantially reduce furnace oil production, replace significant quantities of imported petroleum products and strengthen the country’s energy security.'
Khattak noted that the journey began with the first draft of the Refining Policy in December 2019, followed by its approval in August 2023 and subsequent amendments. He added, 'The delay has come at a considerable cost. Industry estimates indicate that refinery upgradation could save Pakistan around $1.5bn annually in foreign exchange.'
The new policy, approved by the Cabinet Committee on Energy, led by Prime Minister Shehbaz Sharif, on July 28, provides for foreign exchange accounts for imports of machinery against the export of furnace oil and enhances onshore and offshore storage for greater energy security. The policy also includes tax incentives and stability clauses to protect investment.
The fifth local refinery, Pak Arab Refinery (Parco), a joint venture of Pakistan and Abu Dhabi, is not yet ready for the new upgrade as it believes its technology to be modern. However, if and when it signs the upgradation agreements, the total investment is expected to reach $6 billion.
The journey ahead will be challenging as the five refineries translate their commitments into financing, engineering, procurement, construction, and commissioning of the complex projects within the stipulated five-year period. The upgradation is expected to significantly improve product quality and production, enhancing energy security and reducing reliance on imported petroleum products.
Industry experts believe that the upgradation will not only improve the quality and quantity of products but also reduce the country’s dependence on imported fuels, thereby saving foreign exchange. The new policy is expected to bring about a paradigm shift in the refining sector, making it more competitive and sustainable.
These projects will fundamentally modernise Pakistan’s refining infrastructure, enable production of cleaner Euro-V fuels, substantially reduce furnace oil production, replace significant quantities of imported petroleum products and strengthen the country’s energy security.
Adil Khattak, Chairman of the Energy Committee of the OICCI and CEO of Attock Refinery
