Saudi Arabia’s experience will be leveraged to take initiatives; Pakistan is the only country in the 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 scenarios amid rising geopolitical tensions, including the current conflict between Iran and the United States.
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.
“Currently, Pakistan has no strategic oil storage reserves and there is a need to consider inviting Saudi Arabia to help develop such facilities in the country,” sources said citing a proposal that was recently discussed at a high-level meeting.
Azerbaijan and the United Arab Emirates had previously offered to help Pakistan develop strategic oil reserves, but the plan stalled due to bureaucratic delays, eventually leading both countries to backtrack on the initiative.
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 United Arab Emirates. Sources noted that the UAE operates some of the largest oil storage facilities in the region and has leased storage capacity to several countries, including India.
Sources said the government had formed a committee after the Iran-US war exposed Pakistan to multiple risks to its oil supply chain.
Currently the country maintains sufficient oil reserves for about 20 or 30 days, which is considered insufficient in a war situation.
The committee held a meeting to discuss various proposals to establish strategic oil storage reserves in Pakistan. It was noted that Pakistan is already part of the Saudi bloc, which had earlier committed to invest $10 billion in an oil refinery project in Gwadar. Pakistan has enjoyed close relations with Saudi Arabia, especially after signing a defense 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 Iran-bound containers that were stranded in the country during the disruption.
The closure of the Strait of Hormuz has further highlighted Gwadar’s role as a possible alternative transport route.
Experts were of the opinion that Pakistan should take this opportunity and build oil deposits in Gwadar which could also be used by China.
Iran has been supplying oil to China, which was a key importer of its oil. Pakistan has already handed over Gwadar port to China and therefore it was also in China’s interest to have oil deposits in Gwadar.
Experts opined that the Saudi oil refinery could also provide an alternative plan for China to import oil without passing through the Strait of Hormuz.
Azerbaijani company SOCAR was also working with FWO to build a pipeline with an investment of $280 million in Pakistan.
“Pakistan may also take up the matter with Azerbaijan to revive the plan to build strategic oil reserves in Gwadar or Karachi,” say oil industry officials.
Different countries also offered Pakistan to build gas deposits. During the war, Pakistan was facing an energy crisis due to a shortage of LNG.
In Pakistan, a study has been carried out to build gas reservoirs in oil and gas wells that had been depleted.
“This plan can also be revived to build gas reserves, because Pakistan also needs gas, especially for power generation, to save the country,” experts say.
