Pakistan lacks strategic oil reserves despite relying on Hormuz for 90% of oil and LNG imports
People on their motorbikes wait for their turn to get fuel at a petrol station, hours before fuel prices are raised in Pakistan, amid the U.S.-Israeli conflict with Iran, in Karachi, Pakistan, April 30, 2026. Picture taken with a mobile phone. REUTERS
Pakistan plans to boost domestic storage for crude oil and refined products to increase its energy security, according to a government document that was shared with oil producers and some of the world’s leading trading firms.
Despite depending on supplies through the Strait of Hormuz for up to 90% of its oil and liquefied natural gas imports, Pakistan has no strategic petroleum reserves.
That has left it exposed to supply shocks provoked by the Iran 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 by Reuters, the energy ministry is proposing to build strategic petroleum reserves as well as commercial storage through bonded terminals, refineries and oil marketing companies. It is also pushing for more oil and 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.
It shared the proposed framework with Saudi Aramco, Abu Dhabi National Oil Corp, Kuwait Petroleum Corp, QatarEnergy and 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 to Reuters‘ 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, but 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 and 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 and Port Qasim, including single-point mooring, storage and pipeline connectivity, to reduce reliance on smaller, costlier shipments.
