Saudi Arabia’s expertise to be tapped for initiative; Pakistan only country in region without strategic oil reserves
ISLAMABAD:
The government is considering a plan to build strategic oil storage facilities through a joint venture with Saudi Arabia, aimed at strengthening fuel security and preventing shortages in future war-like scenarios amid rising geopolitical tensions, including the ongoing Iran-US conflict.
Pakistan is the only country in the region without strategic oil reserves, while the United Arab Emirates (UAE) has already developed such storage facilities in India.
“At present, Pakistan has no strategic oil storage reserves, and there is a need to consider inviting Saudi Arabia to assist in developing such facilities in the country,” sources said quoting a proposal that has recently been discussed in a high-level meeting.
Azerbaijan and the UAE had previously offered to help Pakistan develop strategic oil reserves, but the plan stalled due to bureaucratic delays, ultimately prompting both countries to step back from the initiative.
The sources said an “oil city” was also proposed, but the plan failed to move forward.
Azerbaijan had offered to help Pakistan build oil storage facilities similar to those developed by the UAE. The sources noted that the UAE operates some of the region’s largest oil storage facilities and has leased storage capacity to various countries, including India.
The sources said the government had formed a committee after the Iran-US war exposed Pakistan to multiple risks to its petroleum supply chain.
The country currently maintains oil stocks sufficient for around 20 to 30 days, which are considered inadequate in a war-like situation.
The committee held a meeting to discuss various proposals for establishing strategic oil storage reserves in Pakistan. It was noted that Pakistan is already part of the Saudi bloc, which had previously committed to investing $10 billion in an oil refinery project in Gwadar. Pakistan has been enjoying close relations with Saudi Arabia, especially after signing a defence pact with the kingdom.
There have also been discussions about the possibility of Saudi Arabia reviving the $10 billion refinery project in Gwadar.
During the war, Pakistan had opened all six trade routes with Iran to facilitate the movement of around 3,000 Iranian-bound containers that were stranded in the country during the disruption.
The closure of the Strait of Hormuz has further underscored Gwadar’s role as a possible alternative transportation route.
Experts were of the view that Pakistan should avail of this opportunity and build oil storages in Gwadar which could be used by China as well.
Iran has been supplying oil to China which was a key importer of its oil. Pakistan has already given Gwadar Port to China and, therefore, it was also in the best interest of China to have oil storages in Gwadar.
Experts were of the view that the Saudi oil refinery could also provide an alternate plan for China to import oil bypassing the Strait of Hormuz.
Azerbaijan firm SOCAR was also working with FWO to build oil pipeline with an investment of $280 million in Pakistan.
“Pakistan can also take up the matter with Azerbaijan to revive the plan of building oil strategic reserves in Gwadar or Karachi,” oil industry officials say.
Different countries had also offered Pakistan to build gas storages. During the war, Pakistan was facing a power crisis due to a shortage of LNG.
There has been a study in Pakistan to build gas storages in those oil and gas wells that had been depleted.
“This plan can also be revived to build gas storages reserves because Pakistan also needs gas especially for power generation to save the country,” the experts say.
