Pakistan has approved a tax-neutral bonded policy that allows Saudi companies to establish commercial oil reserves in the country without local tax liabilities, according to a Petroleum Division statement issued Friday.
Petroleum Minister Ali Pervaiz Malik shared details of the policy during a meeting with the new ambassador of Saudi Arabia to Pakistan, Dr Rajeh bin Tami Al-Baqami. The framework is modelled on international energy hubs such as Fujairah and Singapore.
The statement said the policy offers a way to diversify maritime transit risks linked to the Strait of Hormuz and Bab al-Mandab, while facilitating access to Asian markets. It added that storage facilities in Pakistan would give Saudi Arabia greater flexibility in managing supply routes and accessing regional markets.
Pakistan has no strategic petroleum reserves and has been exposed to supply shocks from the US-Iran war, which has choked supplies through the Strait of Hormuz. In July, Prime Minister Shehbaz Sharif directed authorities to increase the strategic petroleum reserves, as a cabinet committee approved amendments to the oil refining policy.
Malik said Pakistan plans to develop a major petroleum storage and refining complex at Hub in Balochistan under the guidance of Technip Energies UK.
The facility, supported by the prime minister and the chief of defence forces, will accommodate Very Large Crude Carriers (VLCCs). It is also intended to strengthen Pakistan’s role as a regional energy corridor serving Central Asian and Chinese markets.
The minister also briefed the ambassador on investment opportunities under refinery upgradation programme. The programme aims to modernise refining infrastructure, improve operational efficiency and enable a transition to Euro-5 fuel standards. He said it offers significant opportunities for Saudi investment and participation in the refining sector.
