Pakistan approves refinery policy amendments to attract investment, boost fuel output

ISLAMABAD: Pakistan approved amendments to its 2023 Oil Refining Policy to accelerate modernization of existing refineries, increase production of cleaner Euro-V fuels and strengthen the country’s energy security.

Prime Minister Shehbaz Sharif directed authorities to promote the revised policy among Gulf investors, ordering roadshows in Qatar, Saudi Arabia and other Gulf countries to attract investment in brownfield refinery upgrade projects.

Sharif approved the proposed changes while chairing a meeting of the Cabinet Committee on Energy at the Prime Minister’s House.

Prime Minister Muhammad Shehbaz Sharif chairs a meeting of Cabinet Committee on Energy. Islamabad, 28 July 2026. pic.twitter.com/7XAwpIwB3q

— Prime Minister’s Office (@PakPMO) July 28, 2026

The amendments aim to unlock nearly $6 billion in investment for Pakistan’s five existing refineries, which have a combined capacity of about 449,400 barrels per day but currently operate at less than half that level due to declining demand for furnace oil, according to industry reports.

The revised policy extends a seven-year package of fiscal incentives, including tariff protection through deemed duty on petrol and diesel, and introduces stability and parity clauses designed to protect investors against adverse changes in taxation, regulations or foreign exchange policy.

Under the policy, participating refineries must sign legally binding Upgrade Agreements with the Oil and Gas Regulatory Authority within 90 days. The agreements will specify timelines, Euro-V production targets and implementation milestones.

A key feature is a self-financing mechanism through escrow accounts, where a portion of tariff incentives is deposited and can only be withdrawn after financial close and achievement of specified project milestones.

The upgrades are expected to nearly double domestic petrol production and increase diesel output by 47% while sharply reducing furnace oil production, according to an Arif Habib Limited report. Local refineries currently meet about 30% of Pakistan’s petrol demand and 45% of diesel demand.

Pakistan Refinery Limited, Attock Refinery Limited, National Refinery Limited, Cnergyico and Pak-Arab Refinery Company are the five refineries eligible under the policy.