By Qudsia Bano

Pakistan’s plan to develop an Energy City at Gwadar has the potential to strengthen national energy security and position the country as a regional fuel storage and logistics hub, industry experts say, as rising petroleum imports continue to expose the economy to global price volatility and supply disruptions.

The latest official figures highlight the growing importance of expanding the country's energy storage infrastructure. According to the Pakistan Economic Survey 2024-25, Pakistan imported 12.53 million metric tonnes of petroleum products during July-March FY2025, marking an increase of 12.5% from 11.14 million tonnes in the corresponding period of FY2024. The import bill reached $8.40 billion during the nine-month period.

Crude oil imports also registered significant growth, rising 8.8% to 6.76 million tonnes during July-March FY2025, with an import value of $4.11 billion.

Domestic demand continues to rise as well. Petroleum product consumption reached 13.17 million tonnes during the period under review, up 7.04% from 12.30 million tonnes a year earlier. The transport sector remained the largest consumer, accounting for 10.54 million tonnes or nearly 80% of total petroleum demand.

The proposal to transform Gwadar into an energy storage hub gained renewed momentum in May 2026 when Pakistan decided to encourage oil-producing countries to establish strategic crude oil reserves at the proposed Energy City at Gwadar Port. The plan also includes LNG and LPG terminals, while Kuwait has reportedly expressed interest in the project.

Gwadar's strategic location adds considerable commercial value to the initiative. According to the Gwadar Port Authority, the port is Pakistan's third deep-sea port, situated on the Arabian Sea near the entrance to the Persian Gulf and close to major international shipping routes. The China-Pakistan Economic Corridor (CPEC) framework also identifies Gwadar Port, the Free Zone and the Gwadar Smart Port City Master Plan as key development projects.

Muhammad Ali, Head of Supply Chain at Attock Petroleum Limited, said the project's primary advantage lies in reducing Pakistan's overreliance on Karachi-based fuel handling and inland transportation networks.

“Gwadar can provide an additional strategic storage location that enhances energy security and reduces vulnerabilities during supply disruptions,” he said.

According to him, a large-scale storage cluster at Gwadar could shorten emergency response times during global supply shocks while creating commercial opportunities for Gulf oil producers seeking storage facilities near major shipping lanes.

“The increase in petroleum imports and transport-sector demand clearly indicates the need for larger and more diversified storage facilities. Bonded storage, bunkering services and re-export facilities could transform Gwadar from a domestic port project into a regional energy logistics platform,” he added.

Syed Ahsan, Commercial Manager at Pakistan Refinery Limited, said the Energy City concept should extend beyond storage infrastructure alone.

“Pakistan should integrate storage facilities with future refining capacity, petrochemical industries, LNG and LPG terminals, and pipeline infrastructure so that Gwadar can support both strategic reserves and commercial energy trading,” he said.

He stressed that the project’s success hinges on the government's ability to offer investors clear regulations and long-term policy certainty.

“Clear tariff structures, transparent land policies, robust safety regulations and investor protection mechanisms will be essential. Without these measures, foreign oil-producing countries may remain reluctant to place significant strategic reserves in Pakistan despite Gwadar’s geographical advantages,” he said.

Analysts believe the project presents a significant opportunity for Pakistan. With petroleum imports still climbing, including more than 6.7 million tonnes of crude oil in just nine months, and the transport sector consuming four-fifths of all petroleum products, the need for expanded storage infrastructure is becoming increasingly evident.

They argue that if supported by credible regulations, modern infrastructure and foreign investment, the Gwadar Energy City could evolve beyond a domestic infrastructure project into a regional energy hub, helping Pakistan strengthen fuel security, generate storage and transit revenues, and enhance Gwadar’s role in regional trade and energy supply chains.

Credit: INP-WealthPk