Riyadh, Islamabad discuss strategic oil reserves, refinery investment and LPG supplies

ISLAMABAD: Pakistan and Saudi Arabia have agreed to strengthen bilateral cooperation in strategic oil storage, refinery upgradation, crude oil procurement and liquefied petroleum gas (LPG) supplies, with Islamabad offering Saudi companies tax-neutral facilities to establish commercial petroleum reserves in the country.
The understanding was reached during a meeting between Federal Minister for Petroleum Ali Pervaiz Malik and newly appointed Saudi Ambassador to Pakistan Dr. Rajeh bin Tami Al-Baqami on Friday.
The discussions focused on expanding Saudi investment in Pakistan’s petroleum, mining and energy sectors, particularly in the context of regional supply-chain disruptions and the need to diversify energy transportation routes.
During the meeting, the Petroleum Minister informed the Saudi Ambassador that Pakistan had approved a tax-neutral bonded policy, benchmarked against international energy hubs such as Fujairah and Singapore, allowing foreign companies, including Saudi firms, to maintain commercial oil reserves in Pakistan without local tax liabilities.
He said the proposed framework would provide Saudi companies an opportunity to diversify maritime transit risks associated with the Strait of Hormuz and Bab el-Mandeb while facilitating access to Asian markets.
Malik highlighted that strategic oil storage facilities in Pakistan could offer Saudi Arabia greater flexibility in managing crude oil supplies and accessing regional markets.
The minister also briefed the ambassador on Pakistan’s plans to establish a major petroleum storage and refining complex at Hub, Balochistan, under the guidance of Technip Energies UK.
The proposed complex, which has the support of the Prime Minister and Chief of Defence Forces, is envisaged to accommodate Very Large Crude Carriers (VLCCs), potentially positioning Pakistan as a regional energy corridor for Central Asian and Chinese markets.
The two sides also discussed investment opportunities under Pakistan’s ongoing refinery upgradation programme, which aims to modernise existing refining infrastructure, improve operational efficiency and facilitate a transition towards Euro-V fuel standards.
Malik said the programme offered significant opportunities for Saudi investment and participation in Pakistan’s downstream petroleum sector.
Referring to recent disruptions in international energy markets, the minister appreciated Saudi Arabia’s support in ensuring crude oil supplies to Pakistan, particularly the facilitation extended by Saudi authorities at Yanbu port in prioritising Pakistani shipments.
He also discussed coordination with Saudi Aramco to explore increased procurement of crude oil cargoes and dedicated LPG shipments to meet Pakistan’s energy requirements.
The proposed arrangements assume particular importance ahead of the winter season, when domestic gas demand is expected to increase and additional supplies may be required to bridge the demand-supply gap.
The minister emphasised that Pakistan deeply values its longstanding strategic relationship with Saudi Arabia, adding that during his recent visit to Riyadh he had conveyed to Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud the leadership’s special sentiments of solidarity and affection for the Saudi people.
Both sides noted that the longstanding defence and strategic partnership between the two countries provides a foundation for expanding economic engagement, investment and cooperation in regional energy security.
Saudi Ambassador Dr. Rajeh bin Tami Al-Baqami reiterated his country’s appreciation for Pakistan’s longstanding support and said the two countries stood together in all circumstances. He said their defence and energy cooperation frameworks were aimed at promoting regional peace, stability and economic growth.
In a development aimed at facilitating bilateral business and people-to-people contacts, the ambassador informed the minister that the Saudi Embassy in Islamabad had introduced same-day processing of visa applications for Pakistani citizens.
The facility is expected to facilitate business travel, cultural exchanges and other bilateral engagements.
The Petroleum Minister also invited Saudi Arabia’s Vice Minister of Mining, Khalid Al-Mudaifer, to participate in the Pakistan Minerals Investment Forum scheduled to be held in Islamabad on November 12-13, 2026.
He highlighted the potential for further Saudi participation in Pakistan’s minerals sector, which Islamabad is seeking to develop through foreign investment and international partnerships.
Both sides expressed their commitment to expanding cooperation and investment in petroleum, energy and mining sectors, building on their longstanding bilateral relationship.