Cnergyico PK Limited has informed the Pakistan Stock Exchange (PSX) that its board of directors has ratified the execution of a Head of Terms Agreement with Asia Petroleum Limited for the use of APL’s 14-inch pipeline system to transport high-speed diesel (HSD). The long-term agreement spans 20 years and marks a significant shift in how the company will move fuel from its refineries.
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The board approved the move during its meeting held on February 24, 2026. Under the proposed arrangement, HSD will be transported from Cnergyico’s refineries for cargo bound to the Zulfikarabad Oil Terminal. The agreement also includes onward connectivity to the White Oil Pipeline (WOP) system and storage terminals at Port Qasim.
Commercial and Regulatory Framework
The agreement establishes a commercial and regulatory framework for pipeline-based transportation. It will be followed by definitive agreements, subject to certain conditions precedent. These conditions include required governmental and regulatory approvals, as well as the completion of necessary connectivity infrastructure.
Cnergyico’s board has also approved the finalization and execution of the definitive agreement, signaling strong commitment to seeing the project through.
Strategic Benefits
According to the company’s disclosure, the proposed shift from road to pipeline transport is expected to deliver multiple benefits. It will significantly reduce reliance on road transport, lowering the number of oil tanker trucks on Pakistan’s highways. This reduction is expected to decrease traffic congestion and accident risk, addressing a long-standing safety concern associated with fuel transportation.
The pipeline connection will also improve supply chain reliability through direct refinery-to-terminal connectivity and access to the WOP system. Pipeline transport is generally more reliable than road transport, which can be affected by weather, traffic, and security issues.
Industry Context
For Pakistan’s energy sector, pipeline agreements of this nature represent infrastructure development that benefits the entire supply chain. Pipelines are more efficient than road transport for moving large volumes of liquid fuel over long distances. They reduce costs, minimize losses, and have a lower environmental footprint per ton-kilometer.
The 20-year term provides long-term visibility for both parties and justifies the investment required to establish and maintain pipeline connectivity. For Asia Petroleum, it secures utilization of its pipeline infrastructure. For Cnergyico, it ensures a reliable, cost-effective route to market for its refined products.
Next Steps
With the board having ratified the head of terms and approved definitive agreement finalization, the focus now shifts to securing regulatory approvals and completing physical connectivity. These steps will determine the timeline for when pipeline transport can actually begin.
The company’s proactive communication to the PSX ensures transparency with investors and the market. As definitive agreements are signed and conditions met, further updates are expected.
