Govt Plans Oil City at Hub with Offshore Facility and Large Storage Complex

Pakistan is developing a plan to create an integrated oil city at Hub in Balochistan. This city will feature an offshore Single Point Mooring facility, dedicated crude oil and petroleum product pipelines, and large bonded storage facilities. The ultimate goal is to transform Hub into a significant petroleum logistics and trading hub.

The project aims to boost Pakistan's ability to manage large crude oil and petroleum product vessels, alleviating pressure on Karachi and Port Qasim, where port limitations hinder the docking of very large ships. The government has enlisted the services of consultancy firm Technique to carry out a preliminary feasibility study, which is expected to be finished within two months.

Following the study, the government will determine whether to proceed with the subsequent phases. The oil city is planned on government-owned land at Hub, a site that was previously designated for Parco's coastal refinery. Parco submitted the oil city proposal to the petroleum minister during a recent visit to Karachi. Responding to the proposal, the minister instructed Parco to conduct the initial study and further develop the plan.

The proposed offshore Single Point Mooring facility will be positioned in deep waters, enabling large crude oil tankers and vessels carrying finished petroleum products to discharge their cargo without entering shallow water port facilities. This SPM will be connected to the mainland through two distinct pipelines. One pipeline will transport imported crude oil to Kemari facilities at KPT, while the other will convey finished petroleum products to Port Qasim and link up with the current White Oil Pipeline network.

The Hub oil city will also be integrated with the government's revamped customs bonded storage policy. Under this system, petroleum companies and international traders would be able to store imported products in bonded facilities without incurring immediate duties and taxes, provided they comply with regulatory requirements. The concept of bonded petroleum storage is also being explored at other locations, such as Port Qasim, Kemari, Gwadar, Kot Addu, Machike, and Faisalabad.

Gulf-based companies have reportedly expressed considerable interest in establishing storage facilities at several strategic sites. Concurrently, Pakistan is formulating a framework for Strategic Petroleum Reserves (SPR) to enhance energy security and lessen the vulnerability to disruptions in international oil supplies. Consultancy company Wood Mackenzie has been assigned to conduct a thorough study encompassing the technical, financial, commercial, legal, and institutional prerequisites for establishing strategic storage facilities.

The study will also explore international and regional reserve models, prospective public-private partnership structures, and the potential utilization of existing pipelines, transportation networks, and import infrastructure. It will evaluate short, medium, and long-term options for augmenting Pakistan's strategic petroleum storage capacity, including possible locations and implementation models.