Media in recent weeks have been abuzz with news that Pakistan is sitting on massive oil reserves both onshore and offshore. This excitement is largely attributable to the USA’s recent interest in oil exploration in Pakistan, triggered by U.S. President Donald Trump proclaiming a new trade agreement between the U.S. and Pakistan. Under this deal, the U.S. will assist Pakistan in developing its “massive oil reserves”.
The situation is akin to a poor man waking up one morning to be told that he has won a big lottery prize. It gets more interesting when the poor
man, apparently confused, asks himself when he bought one.
Pakistan must not forget that it runs the risk of alienating its all-weather friend China, which has already invested heavily in CPEC and the security threat posed to likely areas of exploration.
The situation at hand needs an insight into the history of exploratory efforts for oil and gas in Pakistan, its outcomes, and where we stand as of now. Historically, oil and gas exploration efforts are as old as Pakistan itself. At independence, the oil and gas sector was underdeveloped, with Burmah Oil showing early interest in exploring regions like Northern Punjab. It was not oil, but the discovery of the Sui gas field in Baluchistan in 1952 by Pakistan Petroleum Ltd. (PPL), which was considered a massive breakthrough. Oil & Gas Development Corporation (OGDC) was established in 1961 to take charge of exploratory efforts. In 1964, Pakistan found oil at Toot
near Attock, Punjab, which wasn’t huge,
but good for a start. Refineries like Attock, National, and Pakistan Refinery Limited also began taking shape.
The 1986 Petroleum Policy changed the game by offering incentives to foreign companies. Exploration increased, with big names like Union Texas and British Petroleum joining the hunt. Discoveries followed in places like Badin, Dhurnal, and Kunar. Market economy and privatisation policies of the 1990s opened up the ecosystem. The government created new regulatory bodies, and more international companies arrived. It was a decade of transition, with increased drilling and investments ushering in an era of more energy demands and discoveries, ultimately followed by natural gas crises, and there we entered LNG dependency in 2015. In 2019, an ambitious offshore well, Kekra-1 near Karachi, turned out to be dry. Was it really dry, or was it declared as such under compulsion? This question will be taken up later in the content. It, however, showed Pakistan’s resolve to take bold steps in exploration. There’s now talk of shale gas as LNG imports continue to rise.
So, where do we stand now? Pakistan produces about 70,000-80,000 barrels of crude oil per day, catering for only a small portion of domestic needs. Natural gas is depleting fast, and the provision of LNG is becoming more critical. Many key players are still active, and the hunt continues for more sustainable energy solutions.
In this backdrop, two hypothetical scenarios emerge. One is to take the USA’s claims unilaterally or bilaterally (supposedly confirmed by Pakistan) as authentic and verified, aimed at putting Pakistan on the international energy centre stage. Two, to consider it as a twist in the tale meant to exert a polar pull on us, i.e. shift the drift more towards the USA than China. There are two underlying assumptions in support of the claim: President Trump’s announcement of assisting Pakistan in the exploration of these reserves, backed up by striking trade deals. The other weird assumption in support can be that offshore well Kekra-1 near Karachi was never dry but was announced to be as such, keeping in view the dictates of national interest at that time (another discussion, another time). Second scenario is built upon two facts and not assumptions; proven historical internal data of past explorations and oil and gas reserves status verified by agencies like EIA, BP Statistical Review / Energy Institute and CIA World Factbook. Ironically, as per technical estimates and proven data, neither of these agencies describes Pakistan’s oil reserves as “massive”. CIA World Factbook places Pakistan 47th globally on the basis of its proven oil reserves and 30th on the basis of its proven natural gas reserves. It declares Pakistan’s potential of fossil fuel reserves as “extensive natural gas reserves”, while noting that oil is comparatively “limited”.
In a nutshell, getting the first scenario crystallised seems to be far-fetched, and in case it does, Pakistan will need to be proactive and ensure that it gets maximum tariff relief in trade deals, seeking infusion of investment and expertise for exploration from the USA. Pakistan must not forget that it runs the risk of alienating its all-weather friend China, which has already invested heavily in CPEC and the security threat posed to likely areas of exploration. Another major risk is that Pakistan sits in a volatile region with tensions brewing with India and Afghanistan already. Therefore, it will be a tough ask to provide for an enabling environment. The second scenario seems to be more likely to unfold, based on ground facts rather than assumptions. The USA’s still coming to the party is owing to its desire to effect a shift in regional dynamics, manifested by its tougher stance on China and India. The narrative, therefore, appears to be more strategically driven, politically motivated and media hyped, rather than grounded in verified geological data and our declared official stance. Is it fueling Pakistan or fueling the duel for supremacy between the USA and China in this region, by the USA? We will soon know.
The writer is a freelance columnist and can be reached at zulfiqar.shirazi @gmail.com