Saudi Arabia and Kuwait to Establish Strategic Oil Reserves in Pakistan, Strengthening Energy Security

ISLAMABAD - In a major development for Pakistan's energy security, Saudi Arabia and Kuwait have committed to establishing strategic oil reserves in the country, with Kuwait building storage capacity for 7 million barrels and Saudi Arabia for 10 million barrels, according to official reports.

The move comes as part of Pakistan's broader strategy to strengthen its fuel security following the recent Iran-U.S. war, which exposed critical vulnerabilities in the country's energy supply chain. Pakistan currently remains the only country in the region without dedicated strategic oil reserves .

Strategic Reserves: A Long-Term Partnership

The multi-billion dollar initiative will see both Gulf nations develop dedicated storage infrastructure within Pakistan. According to sources in the Ministry of Petroleum, Saudi Arabia and Kuwait have expressed strong interest in investing in the project, which aims to establish strategic petroleum reserves sufficient for one to three months of national demand .

The project follows high-level discussions between Pakistani officials and their Gulf counterparts. Federal Minister for Petroleum Ali Pervaiz Malik recently met with Kuwait's Ambassador to Pakistan Nassar Abdulrahman Jasser Almutairi to discuss energy cooperation and explore opportunities around building strategic storages that could bring mutual benefit to all parties .

Regional Vulnerabilities Exposed

The urgency of the initiative was underscored by the recent Iran-U.S. war, which highlighted Pakistan's energy supply chain vulnerabilities. The temporary closure of the Strait of Hormuz - through which a significant portion of global oil shipments pass - had direct implications for energy-importing countries like Pakistan .

Currently, Pakistan maintains petroleum stocks sufficient for only 20 to 30 days - a level widely viewed as inadequate in the event of a prolonged crisis. Commercial stocks cover only about 21 days of demand, while government-level reserves remain minimal .

Investment and Infrastructure Plans

In the initial phase, authorities are preparing a plan for reserves covering one month of national demand. The project is expected to require nearly 1billionininvestment,withestimatessuggestingaround1billionininvestment,withestimatessuggestingaround550 million will be spent on petroleum products and more than $30 million allocated for storage facilities .

Federal Minister for Maritime Affairs Muhammad Junaid Anwar Chaudhry has also invited Kuwait to invest in strategically located coastal and energy-logistics corridors, outlining a range of maritime and port infrastructure projects to attract foreign capital . Proposed projects include fuel storage facilities, bonded terminal facilities, jetty construction, and the government's planned "Energy City" initiative near key ports .

Gwadar's Strategic Role

Energy experts argue that Gwadar Port - a critical node in the China-Pakistan Economic Corridor (CPEC) - could serve as a strategic location for oil storage, particularly as an alternative route if disruptions occur in the Strait of Hormuz. The closure of the route during the recent conflict highlighted Gwadar's potential role in regional energy logistics .

Saudi Arabia had earlier committed to investing $10 billion in an oil refinery project in Gwadar, and discussions are currently underway on the possible revival of that plan . Pakistan's close ties with the kingdom, including a recently signed defence pact, are seen as supportive of deeper energy cooperation.

Mutual Benefits

The strategic reserve arrangement offers significant benefits for all parties involved:

• For Pakistan: Enhanced energy security, reduced vulnerability to supply shocks, and strengthened economic ties with Gulf partners

• For Saudi Arabia and Kuwait: Strategic storage facilities in a geopolitically significant location, ensuring access to reserves during emergencies

• For the Region: Increased energy stability and reduced supply chain risks

According to officials, strategic reserves and commercial stocks will be kept separate to ensure uninterrupted fuel supplies during any extraordinary situation. Friendly countries maintaining reserves in Pakistan would also be able to obtain oil supplies if required .

A History of Energy Cooperation

Kuwait is already a key energy partner for Pakistan, with the country importing more than 60 percent of its diesel requirements from Kuwait under a long-term agreement between Kuwait Petroleum Corporation and Pakistan State Oil. Earlier this year, Kuwait also extended its oil credit facility for Pakistan for another two years .

The development follows Pakistan's long-term energy security plan, which already includes long-term petroleum import agreements with Qatar .

What Comes Next

Both sides have agreed to continue consultations, with follow-up engagements scheduled as Pakistan seeks to deepen economic ties through energy-sector collaboration . The strategic reserve project is expected to move forward alongside plans for refinery expansion and port infrastructure development.

For Pakistan, the establishment of strategic oil reserves represents a significant step toward energy independence and economic stability. For Saudi Arabia and Kuwait, the investment strengthens their partnership with a key ally while diversifying their strategic asset portfolio.