Why Trump talk of Pak's ‘massive oil reserves' is hot air — not much else

Indian Express

a day ago

US President Donald Trump's announcement on Thursday that the Americans will work with Pakistan to develop the latter's 'massive' oil reserves came as a bit of a surprise, as Pakistan is not exactly a country synonymous with oil exploration and production, unlike Saudi Arabia, Iraq, or Venezuela. Far from it, Islamabad depends heavily on energy imports, has dwindling hydrocarbon production, and a rather inconsistent and uninspiring record of oil and gas exploration. There have been a few preliminary studies and reports of potential reserves over the years, but they have remained inconclusive, and the world's oil majors have so far largely steered clear of hydrocarbon exploration in Pakistan.
But Trump appears convinced, at least on his own social media platform, that Pakistan is sitting on huge oil reserves. He went to the extent of saying that 'maybe' Pakistan will be 'selling oil to India some day', a remark that many have interpreted as a veiled jibe at New Delhi over its heavy imports of Russian oil, which has surfaced as an irritant in the India-US relationship. The backdrop also features the heightened tension between India and Pakistan following their military conflagration in May due to the Pahalgam terror attack by Pakistan-backed terrorists. Trump has repeatedly claimed that he brokered the ceasefire between the two countries, while India has maintained that there was no mediation by any other third country.
To be sure, Pakistan's proven recoverable conventional crude oil reserves are pegged between 234 million and 353 million barrels by various estimates, while India's proven reserves are estimated at 4.8-5 billion barrels, or nearly 14 times of Pakistan's. By proven oil reserves, Pakistan is ranked between 50 and 55 in the world, compared to India's ranking in the early 20s. As for natural gas, OPEC's latest annual statistical bulletin pegs India's proven reserves at 1.15 billion cubic metres (bcm), 2.7 times of Pakistan's 0.43 bcm. Pakistan's oil production is estimated at around 60,000 barrels per day, only about a tenth of India's domestic oil output of over 580,000 barrels per day. Both Pakistan and India are heavily reliant on energy imports to meet their domestic demand, and oil is among the top imports for both countries in value terms.
Going by this current data, it is hard to fathom a scenario wherein Pakistan would be in any position to sell oil to India, barring a realisation of Pakistan's hope of some miraculous, fate-altering hydrocarbon discoveries. Theoretically, at least, impossible is nothing, although exploration efforts so far in Pakistan have yielded very limited success.
Then what is the source of this hypothesis of Pakistan sitting on 'massive' oil reserves that Islamabad, and now Trump, appear to be proposing? The basis of this premature assessment might lie in a decade-old report.
In 2015, the US Energy Information Administration (EIA) released a report that estimated around 9.1 billion barrels of 'technically recoverable' shale oil resources in Pakistan based on available data and technical analysis, but without any exploratory effort. The same report had pegged India's technically recoverable shale oil resources at 3.8 billion barrels. These estimates, however, cannot be equated to proven reserves, which rests two rungs higher on the ladder of hydrocarbon resource recoverability. In fact, only a fraction of such technically recoverable estimates might eventually be produced, if at all, according to experts.
Technically recoverable resources mean the oil and gas that can theoretically be produced based on current technology, industry practice, and geologic knowledge. A much smaller subset of these are what are known as 'economically recoverable resources', or oil and gas that could be produced without incurring a loss. Again, not all of these estimated economically recoverable resources may actually be produced due to various technical and economic considerations. A much smaller subset of these resources is what are known as proven or proved reserves—'the most certain oil and gas resource category'.
'Proved reserves are volumes of oil and natural gas that geologic and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions,' the EIA said in that 2015 report. Notably, the American agency also stated that the recoverability of shale oil was quite low—ranging from 3 per cent to 7 per cent of the oil in-place with exceptional cases being as high as 10 per cent or as low as 1 per cent. Suddenly, the 9.1-billion-barrel technically recoverable resource estimate doesn't appear as big.
Also, given that all the assessments were based largely on available geological data and without any real exploratory data or exploration effort, it is anybody's guess how much shale oil production may actually be economically viable and feasible for Pakistan. While nothing can be ruled out from the realm of possibility, experts believe that it is highly improbable that Islamabad will win an oil lottery big enough to offset its own oil imports and then be left with excess volumes to export to India, the world's third-largest consumer of crude oil.
A few reports of hydrocarbon discoveries have appeared in the Pakistani press over the past couple of years, but there is little data available in the public domain to back those claims made by officials in that country's establishment. And again, much of the claims are reported to have been based in surveys and studies, and without any significant exploratory effort.
It is also worth noting that hydrocarbon exploration itself is an extremely expensive and long-gestation endeavour that could last multiple years, which is usually followed by another years-long development phase, before commercial production can start. For Pakistan, this would mean a significant lead time before any of its potential oil reserves can be tapped into, apart from billions of dollars' worth of investments that its fragile economy may not be able to afford. Perhaps that is where one or more of the American oil majors might come in with their deep pockets.