ISLAMABAD: Pakistan’s Oil refineries have signed plant upgrade agreements with the government-nominated Inter State Gas Systems (ISGS), paving the way for around $6 billion in investment aimed at producing higher-efficiency fuels under the new oil refinery policy. The signings took place in Islamabad on Thursday, September 24.
Attock Refinery, National Refinery, Pakistan Refinery and Cnergyico Pk signed the agreements, while Pak Arab Refinery (PARCO) is expected to sign soon. The agreements fall under the Pakistan Oil Refining Policy for Upgradation of Existing Refineries, introduced in 2023 to modernize existing refineries, improve fuel quality and raise domestic production of petrol and diesel while cutting furnace oil output. The policy was amended in February 2024 and again in August 2026, and the revised version was notified earlier this month.
The agreements set out the contractual framework for refinery investments to produce cleaner Euro-V fuels, reduce lower-value furnace oil output and replace some imported petroleum products with domestic production.
Under the framework, ISGS will execute the agreements, monitor upgrade projects, manage refinery upgrade accounts, verify project milestones and administer the incentive payments provided under the policy. The Petroleum Division nominated ISGS as the implementation entity, and Cnergyico’s agreement followed approval by the Economic Coordination Committee (ECC) of the Cabinet.
The move is expected to reduce reliance on imported petrol and diesel, improve fuel quality and strengthen energy security, an effort that has gained urgency as hostilities intensify in the Middle East. Industry estimates suggest the upgrades could save Pakistan around $1.5 billion a year in foreign exchange.
The five refineries, Attock Refinery Limited (ARL), National Refinery Limited (NRL), Cnergyico, Pakistan Refinery Limited (PRL) and PARCO, have a combined capacity of about 350,000 barrels per stream day. They need substantial investment to improve fuel quality and reduce furnace oil production.
Attock Refinery CEO described the signings as a historic milestone and the start of arguably the largest coordinated industrial investment program in Pakistan’s history, worth around $6 billion over the next five years. He noted that the process began with a first policy draft in December 2019.
Cnergyico CEO called the agreement a major milestone for the refining sector and said the company remains committed to completing its upgrade program, which it has divided into three phases. Petroleum Minister Ali Pervaiz Malik and other government officials played a key role in resolving the issues that had delayed implementation.
Those delays stemmed from fiscal and other issues affecting the commercial viability of the multibillion-dollar projects. Financial penalties, including a reduction in deemed duty on HSD, have been introduced for refineries that miss the deadline. With the agreements now signed, the refineries must turn their commitments into financing, engineering and procurement, which industry officials say will be the more challenging phase.
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