https://arab.news/6svfr
- Pakistan energy ministry says both sides agreed to further strengthen economic partnership
- Kingdom has long supported Pakistan’s energy sector with deferred oil payment facilities
ISLAMABAD: Pakistani and Saudi ministers met in Riyadh and discussed enhancing bilateral cooperation between the two countries in the energy sector, the Pakistani energy ministry said on Sunday.
Pakistan relies heavily on imported fuel, with most crude oil and petroleum products sourced from the Middle East. However, concerns have been raised across energy-importing economies since the United States-Iran conflict disrupted energy supplies through the Strait of Hormuz, a critical maritime chokepoint through which roughly one-fifth of global oil and gas supplies passed.
Saudi Arabia has supported Pakistan’s energy sector over the years by granting it deferred oil payment facilities. Pakistan said in April the Kingdom had also committed $3 billion in additional financial support for Islamabad and agreed to extend an existing $5 billion deposit to help shore up its forex reserves to meet condition of an International Monetary Fund (IMF) bailout program.
Pakistan’s energy ministry said on Sunday that Finance Minister Muhammad Aurangzeb and Energy Minister Awais Leghari met Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan in Riyadh, with both sides holding consultations on economic and energy cooperation between the two countries.
“Both countries reiterated their commitment to further expand cooperation in the energy sector,” the Pakistani ministry said, adding that the two sides “agreed to further strengthen economic partnership.”
The development comes amid renewed hostilities between the US and Iran in the Gulf despite an interim deal reached last month to end their war, which began in late Feb.
Pakistan was also accelerating a long-delayed $6 billion refinery upgrade project, officials and industry stakeholders said in May, following the realization of a need for stronger domestic capacity amid the \conflict.
In August 2023, Islamabad unveiled a brownfield refining policy to upgrade Pak-Arab Refinery Limited (PARCO), Attock Refinery Limited (ARL), National Refinery Limited (NRL), Cnergyico Pakistan Limited and Pakistan Refinery Limited (PRL) to produce cleaner Euro-V fuels.
However, momentum slowed in fiscal year 2024-25 after refined petroleum products were exempted from general sales tax (GST). Effectively stalled since then, the project is expected to attract at least $6 billion to modernize Pakistan’s refining infrastructure.
“The longstanding issues of refineries’ upgrade projects are expected to be resolved soon as the importance of refineries came across the government amid Middle East crisis,” an energy ministry official privy to developments told Arab News, requesting anonymity.
“This $6 billion project will involve upgrades by the five refineries who will produce Euro-V standard products such as petrol, diesel, fuel oil, and furnace oil.”
Pakistan last year spent $16 billion on fuel imports, mainly from the United Arab Emirates, Saudi Arabia, Kuwait and Qatar, according to official data.