Pakistan stands at a pivotal energy crossroads. With global momentum pushing toward a post-oil world by 2050, as envisioned under the International Energy Agency’s Net Zero 2050 mandate, the country has a narrowing window, of perhaps 25 years at most, to reduce its dependence on costly imports, responsibly exploit its hydrocarbon resources, and use these revenues to support a just and sustainable energy future. Petroleum will not be the future, but it remains the present. And unless urgent reforms are undertaken, Pakistan risks missing the last opportunity to extract strategic value from its own resources or attract investment to become energy independent Despite vast reserves and strategic geography, Pakistan’s oil sector which spans exploration, refining, and retail, is chronically underdeveloped. The fiscal and regulatory environment is a key reason. The country’s current petroleum framework is misaligned with investor expectations and global best practices. Front-loaded taxation, complex regulatory processes, policy inconsistency, and limited risk-sharing deter upstream exploration. Downstream, the outlook remains challenging. While domestic refineries continue to operate with obsolete technology and low throughput, OMCs are navigating regulated margins, circular debt exposure, and infrastructure bottlenecks; yet continue to invest in expanding retail footprints, upgrading storage, and modernizing distribution systems to ensure supply chain resilience. Historically, though it has been a journey of 166 years only, oil has singlehandedly changed the globe. From the pulsating rockets being launched into darker realms of space, to the cell phone connecting us to the world, our dependency on petroleum is undeniably significant. From the first commercial oil well being drilled in Pennsylvania in 1859, and modest beginnings as a source of kerosene for lamps, petroleum evolved into the lifeblood of modern civilization, powering transportation, electricity generation, and serving as feedstock for countless industrial processes. The early 20th century saw the industry dominated by the “Seven Sisters” – major Western oil companies that controlled approximately 85% of the world’s petroleum reserves; Standard Oil of New Jersey (later Exxon, now ExxonMobil), Royal Dutch Shell (now Shell plc), Anglo-Persian Oil Company (later British Petroleum, now BP), Standard Oil of New York (later Mobil, now part of ExxonMobil), Standard Oil of California (later Chevron), Gulf Oil (later acquired by Chevron), and Texaco (later merged with Chevron) saw the period characterized by colonial-style concessions in resource-rich regions and limited sovereignty for host nations over their natural resources. The oil era will not last forever. But it is still here The Middle East’s ascendancy to dominating the global oil industry began with the 1908 discovery of oil at Masjid-i-Suleiman in Iran (then Persia) by the Anglo-Persian Oil Company (later British Petroleum/BP), changed the dynamics eventually consolidating with Saudi Arabia’s Al-Ghawar field (discovered in 1948) emerging as the world’s largest conventional oil field, and the formation of Organization of Petroleum Exporting Countries (OPEC) in 1960. Other resource-rich countries have adopted smarter approaches. Malaysia, Colombia, Ghana, and Indonesia have implemented progressive fiscal regimes that attract capital while ensuring long-term national benefit. These include lower initial government take to offset exploration risk, production-based sharing formulas, and targeted incentives for complex fields. Pakistan, by contrast, places heavy tax burdens even before commercial production begins, effectively discouraging risk capital from entering the sector. The problem is not limited to upstream taxation. Downstream oil marketing companies and refineries are also squeezed by inconsistent application of the General Sales Tax (GST). The government’s practice of charging GST on deemed prices, rather than actual ex-refinery or ex-depot prices, results in distorted cost structures and unpredictable tax liabilities. This pricing methodology not only violates the principle of fair taxation but also leaves companies exposed to volatile losses when international oil prices fluctuate. The issue has been raised repeatedly by industry stakeholders, including the Oil Companies Advisory Council (OCAC), but remains unresolved, eroding investor confidence and stalling much-needed capital upgrades in refining and retail infrastructure. Oil for now is powerhouse, for it empowers the power generation. The connection is crucial: fluctuations in oil supply and pricing directly influence the cost and availability of electricity, making the GST issue surrounding oil a significant factor in power production stability and affordability. According to the Pakistan Economic Survey 2023-24, the country’s installed electricity generation capacity reached 42,131 MW by March 2024, with fossil fuels, mostly oil and gas, accounting for nearly 59% of the energy generation mix. Yet domestic crude oil production meets only 20% of national demand for petroleum products. Pakistan imports approximately 80% of its petroleum needs, costing over USD 15 billion annually which is the major drain on foreign exchange reserves, fueling inflation, and widening the current account deficit. The country operates five major oil refineries, with a combined capacity of about 19 million tons per year. But aging equipment, low complexity, and limited scale have kept utilization rates often below 60%. Despite a clear need for modernization, recent investment plans have been put on hold, largely due to uncertain tax treatment, absence of long-term policy clarity, and lack of pricing transparency. The consequences are evident. Major international players like Shell plc and Total Energies have exited the Pakistani market. Their departure should serve as a wake-up call. With only 30% of the country’s sedimentary basins explored, vast upstream potential remains untapped. Without reform, that potential will remain permanently lost. In today’s world, unrecovered hydrocarbons are not just a missed economic opportunity; they represent lost energy security and forfeited development. New entrants like Wafi Energy, Aramco, and Gunvor Group offer a ray of hope. Their interest in Pakistan reflects the underlying potential of this market, but only if paired with the right investment environment. But this optimism must be matched with decisive policy action. The time for adhoc adjustments has passed. What is needed is a comprehensive petroleum policy overhaul including investor-friendly exploration incentives, tax rationalization across the value chain, simplified procedures, stable pricing formulas, and long-term guarantees for fiscal and regulatory stability. Energy transitions are never just technological shifts. They are socio-economic transformations, shaped by governance, capital flows, and market signals. While the world moves toward renewables, Pakistan’s dependency on fossil fuels is not going to disappear overnight. Per capita electricity consumption remains low at around just 492 kWh per year when compared to global averages. This underscores a long journey ahead and validates the continued need for fossil fuels in bridging energy access and affordability. At the same time, the long-term direction is clear. By 2040-2050, global demand for oil will likely decline significantly. The International Energy Agency (IEA) projects peak oil demand before 2030, with renewable energy expected to dominate by mid-century. For Pakistan, this means that failure to utilize its hydrocarbon resources now could render them economically and environmentally stranded assets later. The clock is ticking. Pakistan must act now to unlock upstream exploration, upgrade refining capacity, modernize retail distribution, and align tax structures with international best practices. It must also create a clear roadmap to phase in cleaner fuels, develop hydrogen-compatible infrastructure, and expand its nuclear and renewable capacities; all while building fiscal resilience through responsible petroleum development. The oil era will not last forever. But it is still here, and for a country like Pakistan, with rising energy demand, fragile economic buffers, and a young, growing population, the petroleum sector can still play a transformative role. What is needed is not just technical fixes but bold policy leadership. Reforms undertaken today will determine whether the country uses its final petroleum decades to secure energy independence and finance a sustainable future, or continues to import energy it could have produced, at the cost of growth and sovereignty. The writer is an Energy Efficiency & Renewable Energy expert. He can be reached at energyexpert.pk@gmail.com