Despite renewed interest from major US companies in Pakistan’s energy sector, industry experts have cast doubt on claims of “massive” reserves touted by US President Donald Trump, pointing to decades of limited discoveries, foreign exits, and persistent challenges in exploration, reported Bloomberg on Wednesday.
Last month, Trump said that his administration struck a deal with Pakistan in which Washington would work with Islamabad in developing the South Asian nation’s oil reserves.
“We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves,” Trump wrote on social media.
“We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they’ll be selling Oil to India some day!”
Following this, the US administration imposed a 19% reciprocal tariff on a wide range of Pakistani goods, significantly lower than the initially proposed 29%.
Last week, US Charge d’Affaires to Pakistan, Natalie A. Baker, during a high-level meeting with Federal Minister for Petroleum Ali Pervaiz Malik, highlighted strong American interest in Pakistan’s energy sector.
However, Bloomberg, citing its data, pointed out that Pakistan’s oil production has been on a downward trajectory in recent years.
“If Pakistan had massive oil reserves”, then so many foreign companies wouldn’t have left, said Moin Raza Khan, former CEO of Pakistan Petroleum Limited (PPL), one of the country’s largest E&P.
Bloomberg noted that Pakistani officials like to cite a 2013 estimate from the Energy Information Administration of 9.1 billion barrels of recoverable shale oil, but analyst at Arif Habib Limited, Iqbal Jawaid, says the overall country’s reserves are much lower, putting the figure at closer to about 238 million barrels.
Moreover, “it has been more than a decade since anything notable was found in Pakistan,” read the report.
“The two most recent big finds are now the nation’s two-largest oil-producing fields, “said Jawaid.
As per the report, Makori East was discovered in 2011 by a group that includes Hungary’s MOL Group, and Nashpa in 2009 by a venture led by Oil & Gas Development Company Limited (OGDCL).
It said that global energy giants i.e. Eni Spa and Exxon Mobil Corp., took a look at Pakistan’s offshore potential in the Arabian Sea in 2019, drilling a well in partnership with OGDCL and others, “but didn’t find anything meaningful”.
Meanwhile, the report noted that international players have steadily exited the market: Kuwait Petroleum, TotalEnergies, and Shell have wound down operations.
It said that Pakistan, in an attempt to attract new investment, announced a bidding round for 40 offshore blocks, including areas in the Indus Basin, with bids due in October.
“Any discovery that boosts domestic oil production would be a boon for the government, given its energy import bill. The nation’s output has been sliding since hitting a peak in 2018,” said Bloomberg, citing data from the International Energy Agency.
However, even if reserves exist, unlocking them would remain a challenge, warn experts.
“There would be significant risks for those looking to unearth Pakistani reserves, given shortages of technology and infrastructure and entrenched security challenges,” said Michael Kugelman, a non-resident Senior Fellow at Asia Pacific Foundation of Canada, told Bloomberg.
“If these obstacles were easy to overcome, then we would have seen Pakistan tapping into these reserves instead of relying so heavily on oil imports, and we would have seen more external players getting involved,” he said.