Saudi Arabia’s expertise will be used to take initiatives; Pakistan is the only country in the region without strategic oil reserves
ISLAMABAD:
The government is considering a project to build strategic oil storage facilities in a joint venture with Saudi Arabia, aimed at strengthening energy security and preventing shortages in future war scenarios amid growing geopolitical tensions, including the ongoing 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.
“At present, Pakistan does not have strategic oil storage reserves and there is a need to consider inviting Saudi Arabia to assist in developing 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 its strategic oil reserves, but the plan was blocked due to bureaucratic delays, ultimately prompting both countries to withdraw from the initiative.
The sources said an “oil city” was also proposed, but the project did not come to fruition.
Azerbaijan had offered to help Pakistan build oil storage facilities similar to those developed by the United Arab Emirates. The sources noted that the UAE operates some of the largest oil storage facilities in the region and has leased storage capacities to various countries, including India.
The sources said the government formed a committee after the Iran-US war exposed Pakistan to multiple risks to its oil supply chain.
The country currently has sufficient oil stocks for about 20 to 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 pledged to invest $10 billion in an oil refinery project in Gwadar. Pakistan maintains close relations with Saudi Arabia, especially after signing a defense agreement with the kingdom.
Discussions were also held on the possibility of Saudi Arabia reviving the Gwadar refinery project, valued at $10 billion.
During the war, Pakistan had opened all six trade routes with Iran to facilitate the movement of around 3,000 containers bound for Iran which were stuck 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 believe that Pakistan should take advantage of this opportunity and build oil storages in Gwadar which could also be used by China.
Iran supplies oil to China, which was one of the main importers. Pakistan has already handed over the Gwadar port to China and hence it was also in China’s best interest to have oil storages in Gwadar.
Experts believe that the Saudi oil refinery could also be an alternative plan for China to import oil bypassing the Strait of Hormuz.
Azerbaijani company SOCAR was also working with FWO to build an oil pipeline with an investment of $280 million in Pakistan.
“Pakistan can also initiate discussions with Azerbaijan to revive the project of establishing strategic oil reserves in Gwadar or Karachi,” say oil industry officials.
Different countries had also proposed to Pakistan to build gas storages. During the war, Pakistan faced an energy crisis due to a shortage of LNG.
A study was carried out in Pakistan to construct gas storages in depleted oil and gas wells.
“This plan can also be revived to build up gas storage reserves, because Pakistan also needs gas, especially for electricity production, in order to save the country,” experts believe.
