Exploring oil and gas

The oil and gas exploration sector of Pakistan suffered a major setback in 2019 when the much-touted Kekra-1 offshore well turned out to be a bust, with the international consortium drilling the wells at the site disagreeing with then-premier Imran Khan’s claims of the possibility of “massive reserves”. In the most recent revelation, the National Assembly Standing Committee on Energy was informed that no company is interested in offshore oil and gas exploration activities in Pakistan and major players in the sector are leaving the country. Last year, one of the giants of the oil and gas sector, Shell, decided to sell its shares and exit Pakistan. Multiple issues plague the sector with successive governments failing to address the root causes.

It is understood that international companies and consortiums working in the oil and gas sector would gravitate towards countries with favourable business climates. With Pakistan’s economy on the IMF ventilator, the lack of economic vision only compounds the problems such organisations face when operating here. During the latest session of the Standing Committee, the members were informed that a new oil and gas exploration policy to make investments in Pakistan attractive is being worked on, with no timeline given for policy formulation and implementation. With such ambiguity, it makes good business sense that no new player is planning to invest in the sector. Security is also another major obstacle as a significant number of new wells and reserves are situated in Balochistan and Khyber-Pakhtunkhwa.

With energy imports constituting the bulk of the country’s import bill, the government needs to take tangible steps to make exploration activities conducive for international companies and increase domestic production. A new policy must be implemented sooner rather than later if we are to invigorate the domestic oil and gas sector and reverse its downward trajectory.