KARACHI: Kuwait Petroleum Corporation (KPC) has secured access to Pakistan’s storage and port facilities to supply petroleum products to the local market and re-export them across the region, Pakistan State Oil (PSO) said on Thursday. The arrangement represents the first concrete step toward Islamabad’s goal of establishing the country as a regional fuel distribution hub.
The deal follows Islamabad’s decision nearly three months ago to revise its rules, allowing foreign suppliers to hold petroleum products in customs-bonded facilities for domestic sale or re-export. The move is part of a broader effort to bolster energy security after disruptions to oil shipments through the Strait of Hormuz.
“KPC will utilize Pakistan’s storage and port facilities under the Government of Pakistan’s recently revised Customs Bonded Storage Policy, which offers a more facilitative framework for international suppliers,” PSO said in a statement.
“The products will serve both domestic sales and re-exports to regional markets,” the company added. “Relevant Pakistani departments and institutions are expected to finalize the remaining procedures and documentation shortly to enable implementation.”
The agreement was reached during negotiations in Kuwait between a PSO delegation led by Chief Executive Officer Jawwad Ahmed Cheema and senior KPC executives, including Chief Executive Officer Shaikh Nawaf Saud Al-Sabah and Managing Director of International Marketing Shaikh Khaled Ahmad Al-Sabah. The two state-owned energy firms were seeking to broaden a partnership spanning more than five decades.
“KPC’s interest in Pakistan’s storage and port infrastructure creates opportunities to reinforce energy security, support regional trade, and draw investment,” Cheema said.
“PSO is committed to turning these discussions into concrete results over the next fifty years,” he added.
The announcement did not identify which ports or storage sites would be used, the volumes involved, or a timeline for the start of operations.
In August, Pakistan’s Economic Coordination Committee approved revised guidelines permitting foreign suppliers to import petroleum products on their own account and store them in customs-bonded facilities, where goods can be held without immediate payment of import duties and taxes until released into the domestic market.
Pakistan has been working to increase its petroleum storage capacity and diversify its supply arrangements after disruptions tied to the conflict involving Iran laid bare weaknesses in its energy supply chain.
Also in August, Pakistani officials said Saudi Arabia, Kuwait, and Qatar had been consulted on the proposed bonded-storage scheme. Under the plan, international suppliers would be able to keep fuel stocks in Pakistan, giving the country access to additional supplies during emergencies.
Beyond the storage arrangement, PSO and KPC agreed to maintain their long-standing gasoil, or diesel, and jet fuel supply agreements while exploring the expansion of Kuwaiti exports to Pakistan to include motor gasoline and petrochemicals.
The two companies also discussed base oil supplies and cooperation in lubricants marketing, as well as potential Kuwaiti investment in Pakistan’s gas sector, refining, storage infrastructure, shipping, and logistics.