Pakistan Launches Strategic Petroleum Reserve Planning with Initial Target of 45-Day Stockpile
Miles Bennett
Pakistan's energy ministry has launched its first-ever feasibility study for a strategic petroleum reserve, targeting 45 days of stockpile initially — the Iran crisis exposed that the country held just 28 days of commercial inventory, a stark vulnerability for a nation routing 90% of its oil through the Strait of Hormuz.
Why is Pakistan only starting now?
A three-month Iran crisis laid the weakness bare: before it hit, Pakistan's commercial oil stocks covered just 28 days of demand, with zero emergency buffer.
This means → any sustained disruption at the Strait of Hormuz would drain the country's fuel supply in under a month.
The International Energy Agency (IEA) recommends importers hold at least 90 days of reserves. Pakistan was not even halfway there.
Where does the money come from?
The plan carves 10 rupees per liter (roughly 3.6 US cents) from existing petroleum taxes into a dedicated fund — no new taxes.
Waqas Ghani, head of equity research at Karachi's JS Global Capital, estimates this could raise about $700 million a year; building an initial one-month reserve would cost roughly $1 billion.
In plain terms = at that pace, the tax fund alone would need about eighteen months to cover the first month of reserves — assuming none of the money is diverted.
How will the reserve be structured, and who is involved?
The government plans a three-pillar model: state-backed emergency stocks + mandatory industry reserves + bonded commercial storage.
Bonded terminals — customs-supervised facilities where imported oil is stored duty-free and can be released domestically in emergencies — are a centrepiece. Pakistan is in talks with Saudi Arabia, Kuwait, Qatar, the UAE, and China to build such terminals onshore; Gwadar Port is among the candidate sites.
This means → bringing in foreign capital and source-country participation at the same time, easing the fiscal burden while tying reserves directly to supply lines.
Why do experts say "without the details, it is not a strategic reserve"?
Osama Rizvi, global market strategist at US energy consultancy Primary Vision, warns that bonded storage only enhances energy security if emergency-release triggers, pricing rules, stock-rotation protocols, and forex-settlement terms are clearly defined — "otherwise it is just commercial inventory, not a true strategic reserve."
Khalid Waleed, a researcher at Islamabad's Sustainable Development Policy Institute, adds that without transparent release mechanisms, inventory disclosure, pricing formulas, and priority-allocation rules, bonded storage could become a trading facility rather than a safety buffer.
This reflects a deeper issue: drawing up a plan is the easy part — making the reserve genuinely usable in a crisis, free from political and commercial capture, is what counts.
How large is Pakistan's energy-security gap?
Roughly 90% of oil and LNG imports transit the Strait of Hormuz. Domestic demand runs at about 300,000 barrels per day; local output is just 62,000 bpd.
Official data show that bringing import dependence down to a reasonable level would require lifting domestic production to 150,000–200,000 bpd, at an estimated cost exceeding $6 billion at current prices.
Khalid Waleed raises a further trade-off: under fiscal austerity, every dollar stored in an oil tank is a dollar not spent accelerating battery storage, grid flexibility, and electric mobility — This means → the reserve decision cannot be made in isolation; it must be weighed inside the broader energy-transition equation.
Content is for reference only, not financial advice.