FOR far too long, Pakistan’s oil refining sector has remained trapped in the past while the country’s energy needs have continued to evolve. Aging infrastructure, outdated technology and repeated policy delays have left the country increasingly dependent on imported refined petroleum products despite having its own refining capacity. The Cabinet Committee on Energy’s approval of amendments to the Pakistan Oil Refining Policy 2023 on Tuesday is, therefore, a welcome and long-overdue decision.
Most of our refineries are decades old and operate as relatively simple facilities. They produce large volumes of low-value furnace oil but insufficient quantities of higher-quality transport fuels such as petrol and diesel. This imbalance has become increasingly costly as domestic demand for cleaner fuels has grown, forcing Pakistan to import significant volumes of refined products and exposing the economy to fluctuations in international energy prices. The revised policy seeks to change this by encouraging existing refineries to upgrade their facilities to produce Euro-V compliant petrol and diesel while reducing furnace oil output. The benefits extend beyond improving fuel quality. Cleaner fuels will help reduce harmful emissions, improve air quality and enable Pakistan to meet its international environmental commitments. More importantly, they will strengthen the country’s ability to meet domestic fuel demand through local production. Policymakers increasingly view a stronger domestic refining base as a strategic component of national resilience. In a world where energy markets are shaped by geopolitical tensions and supply disruptions, expanding domestic refining capability is as much a matter of national security as it is of economic prudence. The government’s decision to promote the amended policy through investment road shows in Qatar, Saudi Arabia and other Gulf countries is a sensible effort to attract capital for brownfield refinery projects. Our refining capacity currently stands at around 450,000 to 500,000 barrels per day or approximately 21 to 23 million tons annually. Subject to the proposed upgrades, this capacity could increase to nearly 33 million tons per year by 2035. Such expansion would significantly reduce reliance on imported refined fuels, strengthen fuel security and help lower the country’s import bill.
