Five refineries are expected to sign agreements under the Brownfield Refinery Upgradation Policy to modernise plants and increase local fuel production.
ISLAMABAD, PAKISTAN — WEB DESK: Pakistan is set to sign long-delayed agreements with five oil refineries on September 3, paving the way for more than $6 billion in planned investment to modernise ageing plants and increase domestic production of petrol and diesel.
The agreements are being finalised by the Petroleum Division and Inter-State Gas Systems (ISGS), with the government authorising ISGS to sign and oversee their implementation.
The five companies involved are Pak-Arab Refinery Limited (PARCO), Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), Cnergyico and Attock Refinery Limited (ARL).
Refinery upgrades aim to reduce imports
The planned projects fall under Pakistan’s Brownfield Refinery Upgradation Policy, which is designed to encourage existing refineries to modernise their facilities and produce cleaner, higher-value petroleum products.
According to the Petroleum Division, the agreements are expected to unlock approximately $6 billion in investment in the country’s refining sector.
The upgrades are also expected to increase local production of petrol and diesel, potentially reducing Pakistan’s dependence on imported petroleum products.
Pakistan’s five refineries currently have combined crude-processing capacity of about 350,000 barrels per stream day, according to Arab News.
Wider crude-processing capability
An ISGS official told Geo that upgraded plants would be capable of processing a wider range of crude supplies, including crude from Iran and Russia, subject to applicable Pakistani laws and international sanctions.
Greater flexibility in crude sourcing could provide additional options for Pakistan’s refining sector, particularly during periods of disruption in global energy markets.
The development comes as Pakistan faces renewed pressure from international oil prices and disruptions linked to instability around the Strait of Hormuz.
Government changes implementation arrangement
The government has authorised ISGS to sign the refinery agreements and oversee their implementation.
This replaces an earlier arrangement under which the Oil and Gas Regulatory Authority (OGRA) was expected to manage the process, according to Geo’s report.
The Petroleum Division had previously said all five refineries were ready to sign agreements under the Brownfield policy, with the deals expected to unlock around $6 billion in investment.
Industry warns of financing hurdles
Despite the planned signing, industry sources have cautioned that signing the agreements alone will not guarantee that the multibillion-dollar investment materialises.
Geo reported that industry representatives have raised concerns over changes to the financial framework supporting the refinery projects, particularly the proposed replacement of jointly controlled escrow accounts with government-controlled accounts.
Industry sources warned that such changes could affect the bankability of the projects and make it more difficult to reach financial close.
A senior industry source cited by Geo stressed that the actual achievement would come when lenders accept the financing structure, financial close is reached and investment begins flowing into refinery upgrades.
Investment remains planned, not yet realised
The expected agreements represent an important step in Pakistan’s long-delayed refinery modernisation programme, but the more than $6 billion figure should be described as planned or expected investment, rather than money already invested.
The next major milestone will be the signing of the agreements and subsequent progress toward financing and construction.
If successfully implemented, the projects could strengthen Pakistan’s domestic refining capacity, increase production of cleaner fuels and reduce exposure to imported petroleum products.
