Pakistan has offered Saudi Arabia tax-free oil storage under a newly approved bonded policy, a step that would let Saudi companies hold commercial petroleum reserves in the country without paying local taxes.
Pakistan’s Federal Minister for Petroleum, Ali Pervaiz Malik, made the offer on Friday in a meeting in Islamabad with Saudi Arabia’s new ambassador to Pakistan, Rajeh bin Tami Al-Baqami, the petroleum ministry said in a statement reported by Arab News and Business Recorder.
Malik said the tax-neutral bonded policy is benchmarked against international energy hubs such as Fujairah and Singapore.
According to the statement, the framework offers Saudi companies a way to spread the shipping risks tied to the Strait of Hormuz and the Bab Al Mandab Strait while giving them access to Asian markets.
The offer comes as tensions between the United States and Iran have severely disrupted tanker traffic through Hormuz, the main export route for Gulf crude.
Malik also presented plans for a major petroleum storage and refining complex at Hub in Balochistan province, designed to handle Very Large Crude Carriers and serve Central Asian and Chinese markets. Business Recorder reported that the project is being developed under the guidance of Technip Energies UK.
He invited Saudi investment in Pakistan’s refinery upgrade program, which aims to modernize domestic plants and move to Euro 5 fuel standards.
The minister thanked Saudi authorities at Yanbu port for prioritizing crude shipments to Pakistan. He also discussed coordination with Saudi Aramco on buying more crude cargoes and dedicated liquefied petroleum gas shipments ahead of higher winter gas demand in Pakistan.
Saudi Arabia has long supported Pakistan’s fuel needs through financial assistance, oil supplies and investment.
