ISLAMABAD: Pakistan is considering building permanent strategic petroleum reserves as the ongoing US-Iran conflict exposes the country’s vulnerability to supply disruptions and global oil price volatility, Petroleum Minister Ali Pervaiz Malik said on Wednesday.
Pakistan relies heavily on imported fuel, with most crude oil and petroleum products sourced from the Middle East. The conflict involving the United States, Israel and Iran has renewed concerns across energy-importing economies after attacks and counterattacks in the Gulf disrupted shipping routes and raised fears over the security of the Strait of Hormuz, a critical maritime chokepoint through which roughly one-fifth of global oil and gas supplies pass.
The tensions have highlighted the absence of a fully operational strategic petroleum reserve system in Pakistan, leaving the country exposed to external supply shocks and sudden price spikes. Many major economies maintain emergency oil stockpiles to cushion against wars, sanctions, natural disasters or disruptions to global trade routes, but Pakistan currently depends largely on storage maintained by private-sector importers.
Speaking at an energy event organized by the Sustainable Development Policy Institute (SDPI) in Islamabad, Malik said Pakistan was reviewing plans to establish long-term petroleum reserves to strengthen energy security.
“Consultations have been held on preparing permanent strategic reserves of petroleum products in Pakistan,” Malik said.
“Pakistan requires $550 million worth of crude oil on a monthly basis, while storage costs of about $300 million will be required to maintain the strategic reserve,” he added.
Malik said recent disruptions had underscored Pakistan’s dependence on Gulf energy suppliers and thanked Saudi Arabia and Qatar for assisting Islamabad during supply difficulties linked to the regional conflict.
“Saudi Arabia supplied petroleum products to Pakistan from the Yanbu port,” he said.
The minister said Pakistan imported petroleum products worth about $2 billion over the last two months and stressed the need to reduce reliance on imported fuel over the longer term.
Energy analysts say strategic petroleum reserves could help Pakistan manage future geopolitical shocks, though establishing and maintaining them would require substantial financing and infrastructure investment at a time when Islamabad remains under pressure to stabilize its economy under a $7 billion IMF program.
Adil Khattak, chief executive officer of Attock Refinery Limited, Pakistan’s oldest refinery with a processing capacity of 53,400 barrels per day, said Islamabad should explore joint arrangements with oil-producing allies such as Saudi Arabia and Qatar.
“I strongly believe that the only viable option for Pakistan is to have friendly, oil-producing countries establish their strategic petroleum reserves in Pakistan under a joint-management arrangement,” Khattak told Arab News.
He said such a system could benefit both sides by allowing Gulf producers to use Pakistan as a storage and export hub while giving Islamabad emergency access to fuel supplies during crises.
Khattak referred to media reports suggesting Saudi Arabia and Kuwait had discussed establishing strategic petroleum reserves in Pakistan.
“So, I believe both countries have shown interest in building strategic reserves in Pakistan, but nothing is final yet,” he said.
The petroleum ministry did not respond to questions regarding the claim.
Khattak noted that several countries legally require large emergency stockpiles of petroleum products.
“I don’t have the exact figures, but if you look at European countries, a 90-day strategic reserve is mandatory,” Khattak said.
“In China, it is probably more than 50 days.”
Pakistan’s private oil marketing companies are currently required to maintain around 20 days of fuel storage, though Khattak said maintaining large inventories imposed significant financial costs on companies.
“Physically, they have much more capacity,” he said. “But keeping items in inventory incurs financial and inventory costs.”
