Pakistan offers Saudi Arabia tax-free oil storage in Balochistan

Pakistan has offered Saudi Arabia tax-free, bonded petroleum storage on its soil, part of a push to draw Saudi oil investment into Balochistan and recast the province as a regional energy trading hub, the petroleum ministry said after talks in Islamabad this week.

Petroleum Minister Ali Pervaiz Malik put the proposal to Saudi ambassador Dr Rajeh bin Tami Al-Baqami, centring on Pakistan's newly approved tax-neutral storage policy. Under the framework, foreign firms could import and hold crude and refined products in designated bonded facilities free of the usual duties and taxes, with liabilities falling due only when fuel is released into the domestic market; stored supplies could also be re-exported under customs rules. The model borrows from the trading hubs of Fujairah and Singapore, and the government argues it gives suppliers a stockpile closer to emerging regional markets.

At the heart of the pitch is a planned storage and refining complex at Hub in Balochistan, developed with technical guidance from Technip Energies UK and designed to berth very large crude carriers, with offshore single point mooring, pipelines, bonded terminals and possible refining capacity under consideration. Islamabad frames the site as a gateway linking Gulf petroleum suppliers to Pakistan and potentially to China and Central Asia, and as a hedge against disruption at the Strait of Hormuz and Bab al-Mandeb. The government has not disclosed committed funding, final storage capacity, construction dates or a timetable for Saudi-operated facilities, and the 30 October meeting produced no publicly announced binding agreement.

Malik also invited Saudi investors into a refinery modernisation programme aimed at Euro 5 fuels, and the two sides discussed larger crude supplies through Saudi Aramco, including shipments routed via the Red Sea port of Yanbu. No additional volumes or new contract values were confirmed. With colder weather approaching, Pakistan raised dedicated LPG supplies to cover seasonal demand, and Malik invited Saudi Vice Minister of Mining Khalid Al-Mudaifer to the Pakistan Minerals Investment Forum on 12 and 13 November in Islamabad.

For Pakistani consumers already squeezed by energy costs, the immediate effect is nil until commercial demand and investment materialise. The government separately courted energy investors from Kuwait, the Netherlands and Singapore for the storage sector, according to Token Times.