Pakistan offers tax-free oil storage facilities to KSA

In a bid to attract foreign investment, Pakistan has approved a tax-neutral bonded policy allowing Saudi companies to establish commercial oil reserves in the country without local tax liabilities.

The development came during a meeting between Federal Minister for Petroleum Ali Pervaiz Malik and the new Ambassador of Saudi Arabia to Pakistan, H.E. Dr Rajeh bin Tami Al-Baqami, to discuss opportunities for strengthening bilateral cooperation in the mining, petroleum and energy sectors, including strategic oil storage, refinery upgradation, LPG supplies and facilitation of commercial engagement.

The minister informed the Saudi envoy that Pakistan has approved a tax-neutral bonded policy, benchmarked against international energy hubs such as Fujairah and Singapore.

Under this framework, Saudi companies can establish commercial oil reserves in Pakistan without local tax liabilities, offering an opportunity to diversify maritime transit risks associated with the Strait of Hormuz and Bab Al Mandeb Strait while facilitating access to Asian markets, read the statement.

He highlighted that strategic oil storage facilities in Pakistan would provide Saudi Arabia with greater flexibility in managing supply routes and accessing regional markets.

He further highlighted Pakistan’s plans to develop a major petroleum storage and refining complex at Hub, Balochistan, under the guidance of Technip Energies UK.

The proposed facility will have the capacity to accommodate Very Large Crude Carriers and strengthen Pakistan’s potential as a regional energy corridor serving Central Asian and Chinese markets.

Ali Pervaiz also highlighted the investment opportunities offered by Pakistan’s ongoing refinery upgradation programme, aimed at modernising domestic refining infrastructure, improving operational efficiency and transitioning towards Euro 5 fuel standards. He said the programme offers significant opportunities for Saudi investment and participation in Pakistan’s refining sector.

Appreciating Saudi Arabia’s support during recent global market disruptions, the minister thanked the Saudi authorities at Yanbu port for prioritising crude oil shipments to Pakistan.

He also discussed coordination with Saudi Aramco to explore expanded procurement of crude oil cargoes and dedicated LPG shipments to support Pakistan’s energy requirements, particularly in view of the anticipated increase in domestic gas demand during the winter season.

The Saudi Ambassador also announced that the Embassy of Saudi Arabia in Islamabad has introduced same-day processing of visa applications for Pakistani citizens to facilitate travel and strengthen business, cultural and people-to-people exchanges.

The minister also invited Saudi Arabia’s Vice Minister of Mining Khalid al-Mudafier, to participate in the Pakistan Minerals Investment Forum scheduled to be held in Islamabad on November 12 and 13, highlighting further opportunities for cooperation and investment in Pakistan’s minerals sector.