The Economic Coordination Committee (ECC) of the federal cabinet has approved the Draft Upgrade Agreement under the Pakistan Oil Refining Policy 2023, paving the way for major investments in the country’s existing and brownfield oil refineries.
The agreement, amended in August 2026, will provide a framework for implementing and monitoring refinery upgrade projects and related incentives. The projects are expected to be completed within five years.
Pakistan is seeking around $6 billion in investment to modernize its ageing refining infrastructure, increase domestic fuel production and improve the quality of petroleum products.
The planned upgrades could raise petrol production by up to 72% and increase high-speed diesel output by around 39%, according to sources. The investment is also expected to support local production of Euro-V standard fuels.
The approved framework includes investment protection measures, including stability clauses and tax incentives. It also allows foreign currency accounts to facilitate the import of machinery and equipment required for refinery modernization.
The policy further proposes expanding onshore and offshore petroleum storage capacity, which could strengthen Pakistan’s energy security and improve its ability to manage fuel supplies.
Pakistan’s existing refineries largely rely on ageing infrastructure. The proposed investments are aimed at improving operational efficiency, meeting environmental standards and increasing the domestic production of higher-quality fuels.
Higher refining capacity could eventually reduce the country’s dependence on imported petrol and diesel and help ease pressure on fuel prices over the longer term.
