Pakistan plans oil reserves, storage push as Hormuz constraints expose vulnerabilities

Pakistan lacks strategic oil reserves despite relying on Hormuz for 90% of oil and LNG imports

Pakistan plans to boost domestic storage ​forcrude oiland refined products to increase its energy security, according to a government document that was ‌shared with oil producers. some of the world's leading trading firms.

Despite depending on supplies through the Strait of Hormuz for up to 90% of its oil. liquefied natural gas imports, Pakistan has no strategic petroleum reserves.

That has left it exposed to supply shocks provoked by theIran war. even as its ​lending programme with the International Monetary Fund (IMF) limits room for costly state-owned emergency stocks.

According to the document reviewed byReuters, ​the energy ministry is proposing to build strategic petroleum reserves as well as commercial storage through bonded ⁠terminals, refineries. oil marketing companies. It is also pushing for more oil. gas exploration and production, upgrades to its ​refineries and a consolidation of its downstream sector.

"Pakistan's oil security requires both emergency reserves and stronger local supply capacity," the ministry said in ​the document.

Invitation to Bid by Pakistan LNG Limited (PLL)Study for the Development of Strategic Petroleum Reserveshttps://t.co/IdH1O8AbpDpic.twitter.com/s8pa6YgqaX

It shared the proposed framework with Saudi Aramco, Abu Dhabi National Oil Corp, Kuwait Petroleum Corp, QatarEnergy. PetroChina, as well as oil trading firms Vitol and Trafigura and storage operator Vopak.

Trafigura and Vitol declined to comment. The other companies and the petroleum ministry did not respond toReuters' requests ​for comment.

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Petroleum Minister Ali Pervaiz Malik said last week that building reserves was "easier said than done", especially for a country in an ​IMF programme with severe fiscal challenges,. added the government was trying to move quickly from planning to implementation.

Bonded storage, strategic reserves and energy infrastructure

Under ‌the bonded ⁠storage plan, international suppliers. traders would be allowed to hold petroleum stocks, creating commercial inventories that could support domestic supply during emergencies. The government could also allow companies to store fuel for re-export.

The document did not spell out details such as incentives. pricing, tax, foreign exchange, offtake or ownership terms, or whether companies would be expected to invest in storage infrastructure.

The document also calls for an energy infrastructure corridor around the city of Hub. Port Qasim, including single-point mooring, storage and pipeline ​connectivity, to reduce reliance on smaller, costlier shipments.

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