Refineries to ink plant upgrade deals in 45 days

During discussions, the Petroleum Division apprised the forum that the main objectives of the amended oil refining policy were reduction in furnace oil (surplus fuel) production, enhancement of petrol and diesel production capacity and minimisation of lower-value products.

It was highlighted that the amended policy would also help attract much-needed foreign investment to Pakistan's refinery sector as Saudi Arabia had already shown keen interest in capital injection.

Responding to a query, the Petroleum Division clarified that the amendments directed by the Cabinet Committee on Energy (CCOE) during its meeting held on July 28, 2026 had been incorporated into the final draft of the amended "Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023".

It pointed out that the role of an independent third-party consultant had been further elaborated to ensure that independent certification was available and checks built in to ensure that any defaulting refinery or any refinery lagging behind in physical progress on the upgrade agreement, shall not be able to avail of any incentive until the correction of course.

Following consideration of a summary titled "Ratification of the Decision taken by the Cabinet Committee on Energy in its meeting held on July 28, 2026", submitted by the Cabinet Division, the cabinet ratified the decision of the CCOE.The government has designated Inter State Gas Systems (ISGS) as the implementation agency for the Pakistan Oil Refining Policy for Upgradation of Existing/Brownfield Refineries, 2023, as amended in August 2026, shifting key implementation responsibilities first from Ogra to the Petroleum Division and finally to the state-owned company.

The move gives ISGS a central role in implementing the refinery upgrade programme, under which existing refineries are expected to undertake major investments to modernise their plants and improve the quality of petroleum products. The Petroleum Division said the policy allowed refineries to execute upgrade agreements with an entity designated by the division.

It also provides for the formation of a Project Management Unit (PMU), comprising technical and financial experts, to ensure smooth implementation of the policy. Under the policy, the responsibility for the PMU may also be assigned to another entity working under the administrative control of the Petroleum Division.

Expenses will be met from the refinery upgrade accounts. ISGS will be responsible for opening the refinery upgrade accounts, monitoring the modernisation projects, hiring technical consultants and auditors, and making incentive payments from the upgrade accounts.

Industry officials argue these functions carry significant technical and financial responsibilities; therefore, the decision has raised questions over whether ISGS has the required expertise and resources to perform the expanded mandate, particularly given the technical complexities involved in refinery modernisation. Pakistan's existing refineries have for years sought a policy framework that could enable them to undertake multibillion-dollar modernisation projects.

The proposed investments are aimed at improving refinery configurations, producing cleaner fuels and reducing reliance on outdated processing technologies. The brownfield policy was originally introduced in 2023 but subsequently underwent amendments as the government and industry worked to address implementation and commercial issues.