Key Takeaways
- The Cabinet Committee on Energy approved amendments to the Pakistan Oil Refining Policy for Existing/Brownfield Refineries.
- The amendments aim to incentivize refineries to increase production of Euro-V petroleum products.
- The draft Upgrade Agreements are expected to unlock $6 billion in investment in Pakistan’s refining sector.
The Petroleum Division has submitted a draft Upgrade Agreement to the Economic Coordination Committee (ECC) for approval, as part of the amended Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023.
According to sources, the Cabinet Committee on Energy (CCoE) approved the policy amendments on July 28, 2026, and the federal cabinet ratified them on August 10, 2026.
The policy aims to provide incentives to existing refineries to undertake upgradation projects, which will increase production of Euro-V petroleum products, reduce furnace oil production, and improve the overall efficiency of refineries.
Under the policy, refineries must execute Upgrade Agreements with the Petroleum Division or its designated entity, Inter State Gas Systems (ISGS).
ISGS will handle key functions such as executing Upgrade Agreements, operating Refinery Upgradation Accounts, monitoring upgrade projects, engaging technical consultants and auditors, and administering incentive payments.
A committee comprising the Secretary Petroleum Division, Secretary Law and Justice Division, Chairman Oil and Gas Regulatory Authority (OGRA), and Chairman Special Investment Facilitation Council (SIFC) has been constituted to finalize the Upgrade Agreement.
The committee held consultative meetings to update the existing Upgrade Agreement, aligning it with the amended policy and revised implementation arrangements.
Representatives from the Finance Division, National Coordination and Monitoring Committee (NCMC), SIFC, ISGS, and refineries, along with legal firm M/s Orr Dignam, assisted in the process.
The draft agreement was circulated to the Law Division and Finance Division for formal comments. The Law Division confirmed that the agreement was in order and aligned with the Refining Policy, while the Finance Division provided its comments.
The Petroleum Division stated that the proposed Upgrade Agreement would provide a uniform contractual framework for the implementation of refinery upgradation projects under the amended policy.
