The government has initiated work on an ambitious plan to establish an integrated oil city in Hub, Balochistan, aimed at strengthening Pakistan’s petroleum import, storage and distribution infrastructure.
The proposed oil hub will feature an offshore Single Point Mooring (SPM) facility, dedicated oil pipelines and large customs-bonded storage facilities. The project is expected to transform Hub into a major petroleum logistics and trading centre.
The new infrastructure could also help Pakistan handle larger crude oil and petroleum product vessels. Currently, Karachi and Port Qasim face limitations in accommodating very large vessels, increasing pressure on the country’s existing oil import infrastructure.
The government has engaged consultancy firm Technique to conduct a basic feasibility study of the proposed oil city. The study will assess the project’s technical and commercial viability and determine whether the government should proceed with the proposed infrastructure.
Officials expect the feasibility study to be completed within two months, after which the government will decide on the next phase of the project.
The oil city is planned on state-owned land in Hub that had previously been allocated to Pakistan Refinery Limited (PARCO) for a coastal refinery project. The government now intends to use the strategically located land for a broader petroleum infrastructure development.
During a recent visit to Karachi, the Petroleum Minister received a briefing from PARCO management on the proposal. The company presented its concept for developing the integrated oil city, following which the minister directed PARCO to conduct the basic study and further develop the proposal.
Under the proposed plan, PARCO will establish an offshore SPM facility in deep water. The facility will allow large crude oil tankers and petroleum product vessels to unload cargo without having to enter shallow-water port facilities.
The SPM is expected to connect to the mainland through two dedicated pipelines.
One pipeline will transport imported crude oil to the Kemari facilities of Karachi Port Trust (KPT), while the second will carry finished petroleum products to Port Qasim and connect with the existing White Oil Pipeline network.
The planned pipeline links could improve the movement of imported crude and refined petroleum products while reducing pressure on existing port infrastructure.
The government also plans to establish large customs-bonded petroleum storage facilities at Hub.
Under the bonded storage system, oil companies and international traders can store imported petroleum products without immediately paying applicable duties and taxes, subject to regulatory requirements.
Gulf-based companies have also shown interest in developing petroleum storage facilities at Port Qasim, Kemari, Gwadar and Hub.
In addition, the government has proposed petroleum storage facilities at Kot Addu, Machike and Faisalabad, potentially creating a broader coastal and inland petroleum storage network.
Separately, Pakistan is developing a framework for Strategic Petroleum Reserves (SPR) as part of efforts to strengthen energy security and reduce exposure to disruptions in international oil supplies.
The government has hired Wood Mackenzie to conduct a comprehensive study on the proposed strategic reserves.
The study will examine the technical feasibility, safety, operational requirements and integrity of potential storage facilities. It will also review strategic petroleum reserve models implemented in other countries and regions.
Wood Mackenzie will assess Pakistan’s policy, regulatory and institutional requirements, as well as short-, medium- and long-term options for expanding strategic storage capacity.
The consultancy will also evaluate potential locations, storage requirements, implementation models, legal and financial arrangements, and possible public-private partnerships.
The review will further determine whether existing petroleum infrastructure including pipelines, transportation networks and import routes can be utilized for strategic petroleum storage.
The proposed Hub oil city and strategic petroleum reserve framework are expected to play a role in strengthening Pakistan’s long-term petroleum logistics and energy security.
