• Upgrades aimed at cleaner Euro-V fuels, higher production
• Refineries required to maintain 14 days of crude stocks
ISLAMABAD: Four of five local refineries on Thursday finally entered into formal agreements with the government to upgrade their refining technologies for cleaner product quality to Euro-V standards and increased production, with an estimated investment of about $5 billion in five years.
The upgrade agreements were signed under the Brownfield Petroleum Refining Policy 2026, which was approved in the last week of July after a deadlock spanning over seven years.
The formal agreements were signed by the managements of four refineries — Attock Refinery, National Refinery, Pakistan Refinery and Cnergyico Petroleum. These were also signed by the Inter State Gas Systems (ISGS), a subsidiary of the Petroleum Division and a designated entity to execute the agreements and monitor the implementation process.
Informed sources said the fifth local refinery, Pak Arab Refinery (Parco) — a joint venture of Pakistan and Abu Dhabi — was not yet ready for the new upgrade, as it believed its technology to be modern. However, if and when it signs the agreements as well, the investment volume is expected to reach $6bn.
Chairman of the Energy Committee of the Overseas Investors Chamber of Commerce and Industry (OICCI) and Attock Refinery CEO Adil Khattak termed the agreements a historic milestone for the country’s refining industry to begin tangible work on “arguably the largest coordinated industrial investment programme ever undertaken in Pakistan”.
“These projects will fundamentally modernise Pakistan’s refining infrastructure, enable production of cleaner Euro-V fuels, substantially reduce furnace oil production, replace significant quantities of imported petroleum products and strengthen the country’s energy security,” Mr Khattak said.
He recalled that the journey began with the first draft of the Refining Policy in December 2019, followed by its approval in August 2023 and subsequent amendments before finally reaching implementation today — almost seven years later.
“The delay has come at a considerable cost. Industry estimates indicate that refinery upgrade could save Pakistan around $1.5bn annually in foreign exchange,” he said.
The Attock Refinery CEO noted that recent geopolitical developments had reinforced something that the refining industry had emphasised for years. This meant domestic refining capacity was not merely a commercial consideration but a strategic national asset, he said.
Mr Khattak added that the journey ahead would be even more challenging as the four refineries translated their commitments into financing, engineering, procurement, construction and commissioning of the complex projects within the stipulated five-year period.
The new policy was approved by the Cabinet Committee on Energy, led by Prime Minister Shehbaz Sharif, on July 28.
Alongside tax incentives and stability clauses to protect investment, it provides for foreign exchange accounts for imports of machinery against the export of furnace oil, and enhances onshore and offshore storage for greater energy security.
Under the policy, which now supersedes all previous refining policies, the existing refineries have to improve product quality, quantity and product mix through upgrade.
After upgrade, the refineries would be required to ensure crude stocks of at least 14 days’ equivalent of their capacity at all times. Refineries relying on the import of crude oil will ensure an additional five days cover at sea at all times.
Refineries will be allowed to sell their products to any oil marketing company (OMC) licensed by Ogra, as well as to export surplus petroleum products with respect to domestic demand subject to the authority’s approval.
There will be binding agreements between the refineries and OMCs for sale and purchase of major products (motor gasoline and HSD) based on product review meetings to ensure a smooth oil supply chain.
The Petroleum Division is to notify Euro-V fuel specifications for compliance after the upgrading of the refineries within one month of the agreement signing.
Published in Dawn, September 25th, 2026
