Pakistan Pursues Energy Security Through Gulf Storage Scheme and Refinery Upgrades

Pakistan is taking steps to secure its energy security through various initiatives. The country is seeking to strengthen its oil supplies by proposing a Gulf storage scheme, where Saudi Arabia, Kuwait, and Qatar would store crude oil and petroleum products on Pakistani territory at their own cost. This commercial bonded storage scheme aims to store enough crude oil for one month, which would require around $500 million, while an underground storage system could cost an additional $300 million to $400 million.

The proposal has been sent to the Economic Coordination Committee for consideration and is expected to be a game-changer for Pakistan's energy security. Currently, the country relies heavily on imports, with around 90% of its energy requirements met through foreign sources. The domestic oil production stands at roughly 70,000 barrels per day, compared with demand of about 500,000 barrels per day.

Attention is also turning to the infrastructure needed to convert imported crude oil into fuel. Companies are expected to begin signing investment agreements worth around $5 billion to modernise Pakistan's ageing refineries, moving beyond memorandums of understanding towards formal commitments. This upgrade plan aims to give Pakistan greater ability to process petroleum products domestically at a time when disruptions to international supply chains can quickly lead to higher costs and shortages.

Pakistan is also seeking new domestic sources of oil and gas through offshore exploration with Turkish Petroleum, which is expected to begin drilling in Pakistani territorial waters in September or October. This project is expected to attract between $120 million to $150 million in investments.