The Cabinet Committee on Energy on Tuesday approved amendments to the Pakistan Oil Refining Policy 2023 that will enable the modernisation of Pakistan's existing oil refineries to produce Euro-V compliant petrol and diesel, while reducing the production of furnace oil and other low-value petroleum products, according to a statement released by the Prime Minister's Office (PMO).
Prime Minister Shehbaz Sharif chaired the cabinet committee meeting at the Prime Minister's House, where members reviewed refinery upgrades, energy sector reforms, and progress on implementation of the refining policy.
The prime minister said upgrading existing oil refineries was an urgent national requirement and a key pillar of Pakistan's energy security framework. He added that modernised refineries would not only better meet the country's energy needs but also help reduce reliance on imported fuels while increasing the supply of environmentally friendly petroleum products.
اسلام آباد: 28 جولائی 2026.
وزیراعظم محمد شہباز شریف کی زیر صدارت کابینہ کمیٹی برائے توانائی کا اجلاس وزیراعظم ہاؤس میں منعقد ہوا۔ اجلاس میں پاکستان آئل ریفائننگ پالیسی, 2023 میں مجوزہ ترامیم کی منظوری دی گئی۔
وزیراعظم نے کہا کہ آئل ریفائنریز کی اپ گریڈیشن وقت کی اہم ضرورت ہے… pic.twitter.com/vgywz8Uf9c
— Prime Minister's Office (@PakPMO) July 28, 2026
The meeting was informed that upgrading existing refineries was essential to enhance production capacity. Officials said the production of Euro-IV and Euro-V compliant fuels was necessary to meet Pakistan's international environmental commitments, reduce air pollution, and provide consumers with higher-quality fuel.
PM Shehbaz directed authorities to introduce reforms to improve the performance of the Oil and Gas Regulatory Authority (OGRA) and better meet market requirements in order to promote competition, transparency, and investment in the energy sector.
He stressed that the amended policy must be implemented effectively and without delay, warning that negligence or unnecessary delays would not be tolerated.
Instructing relevant ministries and institutions to accelerate the reform process while maintaining close coordination with all stakeholders, PM Shehbaz reaffirmed the government's commitment to pursuing sustainable reforms in the energy sector, promoting modern technology, and creating a conducive environment for investment.
Read: Petroleum minister holds energy investment meetings
The prime minister also directed authorities to hold roadshows in Qatar, Saudi Arabia, and other Gulf countries to promote the amended policy for brownfield refinery projects.
Meanwhile, officials told the meeting that the amendments relating to brownfield refineries were intended to ensure the production of environmentally friendly Euro-V compliant petrol and diesel, while reducing the output of furnace oil and other lower-grade petroleum products.
Further, PM Shehbaz commended Petroleum Minister Ali Pervaiz Malik and his team for their work on the amendments to the refining policy and directed authorities to increase Pakistan's strategic reserves of petroleum products.
The meeting was attended by Planning Minister Ahsan Iqbal, Economic Affairs Minister Ahad Khan Cheema, Finance Minister Muhammad Aurangzeb, Petroleum Minister Malik, senior federal secretaries, among other high-ranking government officials.
Lead-up to policy amendments
The approval comes after weeks of uncertainty over proposed changes to the Brownfield Refinery Policy, with industry stakeholders expressing concern that the government could retrospectively reduce deemed duty protection from 7.5% to 5%.
Refinery representatives argued that such a move would penalise companies for delays they say were caused by the government's failure to execute Upgrade Agreements, despite the industry having accepted the draft agreements in 2024.
Read More: Time to drill deeper or keep importing
Government sources, however, maintained that the proposed reduction was linked to refineries' failure to sign the Upgrade Agreements within the stipulated timeframe.
Industry officials rejected that assertion, saying the agreements were never delayed by the refineries and that they had repeatedly requested the Petroleum Division, OGRA, and other government forums to complete the signing process.
The dispute centred on deemed duty protection, a key incentive under the 2023 policy, designed to support investment in refinery upgrades for the production of Euro-V compliant fuels and lower furnace oil output. Industry representatives contended that the 7.5% protection mechanism existed for more than two decades and argued that reducing it would undermine the economics of planned investments. They also said that the changes introduced through the Finance Act 2024 — which shifted major petroleum products from the zero-rated to the exempt sales tax regime — significantly increased unrecoverable tax costs and further delayed implementation of the policy.
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