By Ariba Shahid
ISLAMABAD: US companies are showing renewed interest in Pakistan’s struggling energy sector following President Donald Trump’s claim of “massive” oil reserves in the South Asian nation, but industry experts remain skeptical, citing decades of limited discoveries and persistent challenges, Bloomberg reported on Wednesday.
Trump announced last month that his administration had struck a deal with Pakistan to develop its 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!”
The announcement, which caught industry veterans by surprise, coincided with a US decision to impose a 19 percent reciprocal tariff on a range of Pakistani goods, lower than an initially proposed 29 percent. Last week, US Charge d’Affaires to Pakistan, Natalie A. Baker, met with Pakistan’s Federal Minister for Petroleum, Ali Pervaiz Malik, in Islamabad to discuss strengthening energy sector cooperation. Baker highlighted “strong and growing interest” from US companies in Pakistan’s oil, gas, and minerals sector, according to a statement from Pakistan’s petroleum ministry.
However, Pakistan’s oil production has been declining since peaking in 2018, according to data from the International Energy Agency cited by Bloomberg. The country spends approximately $11 billion annually on oil imports, nearly a fifth of its total import bill, central bank data shows. This heavy reliance on imports underscores the potential economic benefits of boosting domestic production, but experts question the feasibility of Trump’s claims.
“If Pakistan had massive oil reserves, then so many foreign companies wouldn’t have left,” said Moin Raza Khan, former chief executive of Pakistan Petroleum Limited, one of the country’s largest exploration and production firms.
Pakistan’s proven recoverable conventional crude oil reserves are estimated at between 234 million and 353 million barrels, placing it around 50th globally, far behind major producers like Saudi Arabia, Russia, and the United States, which hold billions of recoverable barrels, according to Rystad Energy estimates. Pakistani officials often cite a 2013 US Energy Information Administration estimate of 9.1 billion barrels of technically recoverable shale oil, but Iqbal Jawaid, an analyst at Karachi-based Arif Habib Limited, told Bloomberg that overall reserves are closer to 238 million barrels.
“It has been more than a decade since anything notable was found in Pakistan,” Jawaid said, noting that the country’s two largest oil-producing fields, Makori East and Nashpa, were discovered in 2011 and 2009, respectively. Makori East was found by a group including Hungary’s MOL Group, while Nashpa was led by state-owned Oil & Gas Development Company Limited (OGDCL).
Foreign investment in Pakistan’s energy sector has waned in recent years, with major companies exiting the market. Kuwait Petroleum Corp. began its withdrawal last year after over four decades, TotalEnergies SE sold its stake in a fuel business, and Shell Plc departed in 2023 after 75 years of operations. In 2019, global energy giants Eni Spa and Exxon Mobil Corp. explored offshore potential in the Arabian Sea in partnership with OGDCL but found no significant reserves.
To reverse this trend, Pakistan announced a bidding round for 40 offshore exploration blocks, including areas in the Indus Basin, with bids due in October. Anas Farook, OGDCL’s chief financial officer, said at a recent conference organisd by Topline Securities Ltd. that discussions with US companies were underway, though he provided no further details, Bloomberg reported.
“Any discovery that boosts domestic oil production would be a boon for the government, given its energy import bill,” Bloomberg noted. However, experts warn that unlocking potential reserves faces significant hurdles.
“There would be significant risks for those looking to unearth Pakistani reserves, given shortages of technology and infrastructure and entrenched security challenges,” Michael Kugelman, a non-resident senior fellow at the 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.”
Pakistan’s government is positioning the U.S. deal as part of a broader strategy to diversify foreign investment and reduce reliance on Chinese capital, particularly after security concerns disrupted projects under the China-Pakistan Economic Corridor. The nation’s $350 billion economy faces additional pressures from a $100 billion external debt and persistent inflation, according to the Ministry of Finance and the World Bank.
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