Pakistan is moving to strengthen its energy security by expanding strategic petroleum reserves and overhauling its refining sector, following disruptions caused by the US-Iran conflict. Prime Minister Shehbaz Sharif has ordered a concrete increase in domestic storage capacity for crude oil and refined products, while a cabinet committee has approved amendments to the country's oil refining policy. These measures, announced after a meeting of the Cabinet Committee on Energy (CCoE) on Tuesday, aim to reduce vulnerability to supply shocks and modernize the country's fuel production. Main Developments The CCoE, chaired by PM Shehbaz, approved amendments to the Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries 2023. Officials briefed the meeting on refinery upgrade progress, energy sector reforms, and policy implementation, according to a statement from the Prime Minister's Office (PMO). The prime minister directed that roadshows be held in Qatar, Saudi Arabia, and other Gulf countries to promote the amended policy for brownfield refineries. PM Shehbaz emphasized that effective and timely implementation of the new policy must be ensured, warning that no negligence or delay would be tolerated. He also ordered reforms to improve the performance of the Oil and Gas Regulatory Authority (Ogra) to promote competition, transparency, and investment in the energy sector. The meeting was attended by Finance Minister Muhammad Aurangzeb, Petroleum Minister Ali Pervaiz Malik, Economic Affairs Minister Ahad Khan Cheema, and Planning Minister Ahsan Iqbal. Read also: Why Pakistan's Trade Goal with the US Could Hit $20 Billion Background Pakistan currently has no strategic petroleum reserves, leaving it exposed to oil supply disruptions such as those caused by the US-Iran war, which has choked supplies through the Strait of Hormuz. The Pakistan Oil Refining Policy for Upgradation of Existing Brownfield Refineries 2023 was finalized in August 2023 and approved in April 2024 after six years of consultations. However, it stalled when the federal budget for FY24-25 effectively canceled the policy's incentives. In May 2025, all five refineries were ready to initiate upgrade projects involving a $6 billion investment after the government addressed their key demand to clear Rs34 billion in stuck-up funds through petroleum pricing. But the budget nullified many incentives, causing refineries to back off at the last moment from signing agreements. The US-Iran war then compelled the government to revive the policy after it could not be enforced due to flawed negotiations with the International Monetary Fund (IMF). Why It Matters The approved amendments aim to ensure production of environment-friendly petrol and diesel compliant with Euro-V standards, reducing furnace oil and low-quality petroleum products. Meeting Euro-IV and Euro-V standards is essential for fulfilling Pakistan's international environmental commitments and reducing air pollution. The upgrades would also reduce dependence on imported fuel and provide environment-friendly fuel, strengthening the country's comprehensive energy security system. Refineries have linked investment revival to four major enabling guarantees, including a stability clause in the refining policy during the three-to-five-year implementation phase. Exemption of sales tax on petroleum products has been identified as a key issue affecting project viability. Under the IMF programme, authorities committed not to grant any tax exemptions already promised to the refineries, leaving required equipment and materials subject to sales tax and duties without input-output adjustments, creating cash flow problems. What's Next The government has assured the refining sector of corrective measures in the budget for FY26-27 to revive the $6 billion investment for refining upgrades and expansion. PM Shehbaz directed relevant ministries and institutions to expedite the reform process while maintaining close contact with all stakeholders. Last week, US firm Honeywell Technologies discussed a proposed plan to modernize and expand Pakistan's refinery sector during a meeting with the finance minister in Washington.