Oil & Gas

A recent survey has revealed significant oil and gas reserves in Pakistan's territorial waters, a discovery that could potentially transform the country's struggling economy. Experts caution, however, that while the reserves could alleviate reliance on imported energy sources, it will take considerable time and investment to begin extraction. Former Ogra member Muhammad Arif highlighted the need for approximately $5 billion just for exploration, and extraction from offshore locations could take four to five years.

Currently, Pakistan relies heavily on imports for its energy needs, covering 29% of its gas, 85% of its oil, and a significant portion of liquefied petroleum gas (LPG) and coal. The country’s energy import bill reached $17.5 billion in 2023, with projections suggesting it could rise to $31 billion within seven years. Amidst rising debt and rampant inflation, the new discovery provides hope for economic relief, but the timeline for tangible benefits remains uncertain.

Despite the potential for transforming Pakistan’s energy landscape, international interest in drilling remains low. Shell’s sale of its Pakistan operations and the lack of bidders for oil and gas blocks underscore concerns about the security situation in the region. Recent violent incidents, including attacks on Chinese projects, have heightened apprehensions among foreign investors, making it difficult for Pakistan to attract the necessary expertise and capital for development.

The situation highlights a reliance on Chinese state-owned enterprises, which may have a higher risk tolerance compared to international companies. As Pakistan grapples with energy shortages and a growing black market for fuel, the government's challenge will be to create a stable environment that can effectively utilize these newly discovered resources while addressing the underlying security concerns that deter investment.