PM greenlights refinery policy amendments, seeks Gulf funding

July 28, 2026 (MLN): Pakistan has approved amendments to the Oil Refining Policy 2023 to fast-track the modernization of existing refineries, expand the production of cleaner Euro-V fuels, attract an estimated $6bn in investment, and strengthen the country's long-term energy security.

The approval came during a meeting of the Cabinet Committee on Energy, chaired by Prime Minister Shehbaz Sharif at the Prime Minister's House on Monday.

The revised policy, prepared after consultations with stakeholders including the Special Investment Facilitation Council (SIFC), aims to upgrade Pakistan's aging refining sector, increase the production of motor gasoline and high-speed diesel, reduce furnace oil output, and improve fuel quality in line with international environmental standards.

The prime minister also directed authorities to actively promote the revised policy among investors in Qatar, Saudi Arabia, and other Gulf countries through dedicated investment roadshows aimed at attracting funding for brownfield refinery upgrade projects.

Calling refinery modernization an urgent national priority, Sharif said aligning Pakistan's refineries with modern standards would help meet the country's energy needs more efficiently, reduce reliance on imported petroleum products, and support the supply of environmentally friendly fuels.

The committee was informed that upgrading existing refineries is essential to increase refining capacity and enable the production of Euro-IV and Euro-V compliant fuels.

According to the briefing, the revised policy is designed to facilitate the production of cleaner Euro-V gasoline and diesel while reducing the output of furnace oil and other lower-value petroleum products from existing brownfield refineries.

The government said the policy includes a seven-year incentive package to support refinery upgrades and enable the production of Euro-V standard fuels.

To qualify, refineries must first clear outstanding petroleum levy and climate support levy obligations, while existing beneficiaries of previous refinery incentive packages will be required to relinquish those arrangements before opting into the new framework.

Under the revised policy, oil refineries will be required to sign legally binding upgrade agreements with the Oil and Gas Regulatory Authority (OGRA) within 90 days of the policy's approval to strengthen monitoring, implementation, and accountability throughout the modernization process.

To facilitate financing and attract foreign investment, refineries will be allowed to open foreign currency accounts for servicing external debt obligations. The policy also provides protection against adverse changes in taxation, environmental legislation, and foreign exchange regulations during the agreed investment period, offering greater certainty to investors.

As part of efforts to strengthen domestic refining and reduce dependence on imported fuels, the policy proposes a 10% regulatory duty on imports of motor gasoline and high-speed diesel.

To bolster energy security, all oil refineries will be required to maintain crude oil inventories equivalent to 14 days of operations, while refineries relying on imported crude will have to maintain an additional five days of strategic stocks.

Officials noted that cleaner fuels would help Pakistan fulfill its international environmental commitments, improve air quality, and enhance fuel quality for consumers.

The prime minister instructed the relevant ministries and institutions to ensure the swift implementation of the revised policy, warning that delays or negligence would not be tolerated. He also emphasized close coordination among stakeholders to accelerate refinery upgrade projects.

The government, however, recommended that refineries facing genuine project-related delays in completing upgrades should not automatically be subjected to punitive action.

Sharif further called for reforms in the Oil and Gas Regulatory Authority (OGRA) to enhance transparency, competition, and investment across Pakistan's energy sector.

Reaffirming the government's commitment to sustainable energy-sector reforms, the prime minister also directed authorities to increase Pakistan's strategic petroleum reserves to strengthen the country's energy security.

Prime Minister Sharif also commended Petroleum Minister Ali Pervaiz Malik and his team for 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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